[Federal Register Volume 73, Number 225 (Thursday, November 20, 2008)]
[Rules and Regulations]
[Pages 70245-70256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-27398]



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  Federal Register / Vol. 73, No. 225 / Thursday, November 20, 2008 / 
Rules and Regulations  

[[Page 70245]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1465

RIN 0578-AA50


Agricultural Management Assistance Program

AGENCY: Commodity Credit Corporation, United States Department of 
Agriculture.

ACTION: Interim final rule with request for comment.

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

SUMMARY: The Natural Resources Conservation Service (NRCS) is amending 
the regulations for the Agricultural Management Assistance program 
(AMA). Section 2801 of the Food, Conservation, and Energy Act of 2008 
(2008 Act) amended the Agricultural Management Assistance program (AMA) 
by: Expanding the program's geographic scope to include Hawaii; and 
providing $15 million in mandatory funding for each of fiscal years 
2008 through 2012. NRCS issues this interim final rule with request for 
comment to incorporate statutory changes resulting from the 2008 Act 
and to make administrative changes to improve program efficiency.

DATES: Effective Date: The rule is effective November 20, 2008. Comment 
date: Submit comments on or before January 20, 2009.

ADDRESSES: You may send comments (identified by Docket Number NRCS-IFR-
08002) using any of the following methods:
     Government-wide rulemaking Web site: go to http://www.regulations.gov and follow the instructions for sending comments 
electronically.
     Mail: Director, Financial Assistance Programs Division, 
Natural Resources Conservation Service, Agricultural Management 
Assistance Program Comments, P.O. Box 2890, Room 5237-S, Washington, DC 
20013.
     Fax: (202) 720-4265
     Hand Delivery: Room 5237-S of the USDA South Office 
Building, 1400 Independence Avenue, SW., Washington, DC 20250, between 
9 a.m. and 4 p.m., Monday through Friday, except Federal Holidays. 
Please ask the guard at the entrance to the South Office Building to 
call: (202) 720-4527 in order to be escorted into the building.
     This interim final rule may be accessed via Internet. 
Users can access the NRCS homepage at http://www.nrcs.usda.gov/; select 
the Farm Bill link from the menu; select the Interim final link from 
beneath the Final and Interim Final Rules Index title. 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).

FOR FURTHER INFORMATION CONTACT: Director, Financial Assistance 
Programs Division, Natural Resources Conservation Service, P.O. Box 
2890, Washington, DC 20013-2890; Phone: (202) 720-1844; Fax: (202) 720-
4265; or e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Regulatory Certifications

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
interim final rule is a non-significant regulatory action under 
Executive Order 12866.

Regulatory Flexibility Act

    NRCS has determined that the Regulatory Flexibility Act is not 
applicable to this interim final rule because NRCS is not required by 5 
U.S.C. 553, or any other provision of law, to publish a notice of 
proposed rule making with respect to the subject matter of this rule.

Environmental Analysis

    The National Environmental Policy Act (NEPA) applies to ``major 
Federal actions'' where the agency has control and responsibility over 
the actions and has discretion as to how the actions will be carried 
out (40 CFR part 1508.18). Accordingly, any actions that are directed 
by Congress to be implemented in such manner that there is no 
discretion on the part of the agency are not required to undergo an 
environmental review under NEPA. The lack of discretion over the action 
by the agency undermines the rationale for NEPA review--evaluation of 
the environmental impacts of the proposed action and consideration of 
alternative actions to avoid or mitigate the impacts. Where Congress 
has directed that a specific action be implemented and an agency has no 
discretion to consider and take alternative actions, NEPA review would 
be moot.
    For AMA, Congress has mandated the addition of Hawaii to the list 
of States to which the Secretary is authorized to provide financial 
assistance. The Secretary of Agriculture is, therefore, required to 
make this addition to the program. There is no discretion on the part 
of the agency to take this action. For this reason, an environmental 
review of these changes under NEPA is not required.

Civil Rights Impact Analysis

    NRCS has determined through a Civil Rights Impact Analysis that the 
issuance of this interim final rule will not have a significant effect 
on minorities. Copies of the Civil Rights Impact Analysis may be 
obtained from Director, Financial Assistance Programs Division, U.S. 
Department of Agriculture (USDA), Natural Resources Conservation 
Service (NRCS), P.O. Box 2890, Washington, DC 20013-2890.

Paperwork Reduction Act

    Section 2904 of the 2008 Act requires that implementation of 
programs authorized by Title II of the 2008 Act be made without regard 
to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
Therefore, NRCS is not reporting recordkeeping or estimated paperwork 
burden associated with this interim final rule.

Government Paperwork Elimination Act

    NRCS is committed to compliance with the Government Paperwork 
Elimination Act, which requires Government agencies, in general, to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible. To better 
accommodate public access, NRCS has developed an online application and 
information system for public use.

[[Page 70246]]

Executive Order 12988

    This interim final rule has been reviewed in accordance with 
Executive Order 12988, Civil Justice Reform. The provisions of this 
interim final rule are not retroactive. Furthermore, the provisions of 
this interim final rule preempt State and local laws to the extent such 
laws are inconsistent with this interim final rule. Before an action 
may be brought in a Federal court of competent jurisdiction, the 
administrative appeal rights afforded persons at 7 CFR parts 11 and 614 
must be exhausted.

Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994

    USDA classified this interim final rule as ``not major'' under 
Section 304 of the Department of Agriculture Reorganization Act of 
1994, Public Law 104-354. Therefore, a risk assessment is not required.

Unfunded Mandates Reform Act of 1995

    Pursuant to Title II of the Unfunded Mandates Reform Act of 1995, 
Public Law 104-4, NRCS assessed the effects of this rulemaking action 
on 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 governments, or anyone in the private sector, and 
therefore, a statement under section 202 of the Unfunded Mandates 
Reform Act is not required.

Discussion of Program

    The conservation provisions of AMA are administered and implemented 
under the general supervision and direction of the Chief of NRCS, who 
is a Vice President of the Commodity Credit Corporation (CCC). 
Accordingly, where NRCS is mentioned in this rule it also refers to the 
CCC's funds, facilities, and authorities where applicable. While NRCS 
has leadership for the conservation provisions of AMA, other agencies 
have authority for different aspects of the program. The Agricultural 
Marketing Service (AMS) has responsibility for the organic 
certification cost-share program and the Risk Management Agency (RMA) 
has responsibility for the insurance cost-share program for mitigation 
of financial risk.
    Through AMA, NRCS provides technical and financial assistance to 
participants in eligible States to address issues, such as water 
management, water quality, and erosion control by incorporating 
conservation practices into their agricultural operations. Producers 
may construct or improve water management structures or irrigation 
structures; plant trees for windbreaks or to improve water quality; and 
mitigate risk through production diversification or resource 
conservation practices, including soil erosion control, integrated pest 
management, or organic farming.
    Section 524(b) of the Federal Crop Insurance Act, as amended by 
Section 133 of the Agricultural Risk Protection Act of 2000, authorized 
AMA to provide assistance to producers in States that historically had 
low participation in the Federal Crop Insurance Program. The Farm 
Security and Rural Investment Act of 2002 (2002 Act) made amendments to 
AMA to specify the eligible States and provide additional clarity to 
the assistance to be made available. The AMA regulation (7 CFR part 
1465) was published in the Federal Register on April 9, 2003.
    Section 2801 of the 2008 Act amended AMA to include Hawaii as an 
eligible State, and to authorize $15 million in funding each year from 
fiscal year (FY) 2008 through FY 2012. NRCS has evaluated seven years 
of program implementation and identified opportunities to improve 
program administration and alignment with other financial assistance 
programs administered by the Agency. The revisions to the AMA 
regulation, described below, reflect the changes mandated by the 2008 
Act and opportunities to improve program administration for greater 
efficiency.

Summary of Provisions

Section 1465.1, Purposes and Applicability

    Section 1465.1, ``Purposes and Applicability,'' sets forth the 
purpose, scope, and objectives of AMA. Through AMA, NRCS provides 
technical and financial assistance to producers in statutorily-
designated States. Section 2801 of the 2008 Act expanded AMA's 
geographic scope to include the State of Hawaii. In response, NRCS 
revises Sec.  1465.1 to add Hawaii to the list of States eligible for 
AMA assistance and replaces ``15'' with the number ``16'' when 
referring to the number of eligible States. AMA is now available in 
Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Maine, Nevada, 
New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah, 
Vermont, West Virginia, and Wyoming.

Section 1465.2, Administration

    Section 1465.2, ``Administration,'' describes the role of NRCS and 
provides a brief overview of the Agency's administrative 
responsibilities. NRCS amends Sec.  1465.2 to reflect the 2003 decision 
made by USDA to have NRCS administer the AMA natural resource 
conservation provisions and to clarify NRCS's relationship with the 
Commodity Credit Corporation (CCC). Prior to FY 2004, NRCS and the Farm 
Service Agency (FSA) jointly administered the AMA natural resource 
conservation provisions. A 2003 decision made by USDA transferred all 
administrative responsibilities to NRCS. Therefore, Sec.  1465.2 is 
revised to remove reference to Farm Service Agency (FSA) and reflect 
that NRCS has the responsibility for issuing payments for conservation 
practices. NRCS also revises Sec.  1465.2(c) to clarify that lower 
delegations of authority can be overridden by the Chief, if necessary, 
to uphold the purposes of AMA. This addition is consistent with other 
NRCS natural resource conservation programs.

Section 1465.3, Definitions

    Section 1465.3 sets forth definitions for terms used throughout 
this regulation. Several new definitions have been added or revised to 
align AMA terms with terms used by other NRCS conservation programs. 
The following existing definitions are revised: ``Applicant,'' 
``Conservation district,'' ``Conservation practice,'' ``Contract,'' 
``Indian Tribe,'' ``Liquidated damages,'' ``Participant,'' 
``Producer,'' ``State Conservationist,'' and ``Technical assistance.'' 
NRCS also replaces several existing terms with terms more reflective of 
AMA's purposes. The term,``Cost-share payment'' is replaced with 
``Payment,'' to reflect the breadth of the types of costs that may be 
considered in determining payments. The term ``Indian trust lands'' is 
replaced with the term ``Indian land'' to broaden the scope and align 
AMA with other NRCS conservation programs. Finally, the term 
``Conservation plan'' is replaced with the term ``AMA plan of 
operations (APO)'' to align AMA with other NRCS conservation programs 
that identify a plan of operations. NRCS adds the following terms and 
definitions to the AMA regulations to be consistent with related 
conservation programs: ``Agricultural land,'' ``Agricultural 
operation,'' ``Beginning farmer or rancher,'' ``Historically 
underserved producer,'' ``Joint operation,'' ``Legal entity,'' 
``Limited resource farmer or rancher,'' ``Livestock,'' ``Natural 
Resources Conservation Service (NRCS),'' ``Nonindustrial private forest 
land,'' ``Operation and maintenance (O&M) agreement,'' ``Person,'' 
``Resource concern,'' ``Socially disadvantaged farmer or rancher,'' 
``Structural

[[Page 70247]]

practice,'' and ``Technical Service Provider (TSP).'' The terms, ``Unit 
of concern'' and ``State Technical Committees'' are removed since they 
are no longer used in the AMA regulations.
    Specifically, the following definitions have been amended:
    NRCS adds the definition of ``agricultural land'' to better define 
the land where AMA assistance will be provided. Agricultural land is 
cropland, grassland, rangeland, pasture, and other agricultural land, 
on which agricultural and forest-related products or livestock are 
produced and resource concerns may be addressed. Agricultural lands 
include cropped woodland, marshes, incidental areas included in the 
agricultural operation, and other types of agricultural land used for 
the production of livestock.
    NRCS adds the definition of ``agricultural operation'' to closely 
align AMA's definitions with definitions used by other NRCS 
conservation programs. Section 1465.3 defines an ``agricultural 
operation'' as ``a parcel or parcels of land whether contiguous or 
noncontiguous, which the producer is listed as the operator or owner/
operator in the Farm Service Agency (FSA) record system, which is under 
the effective control of the producer at the time the producer applies 
for a contract, and which is operated by the producer with equipment, 
labor, management, and production, forestry, or cultivation practices 
that are substantially separate from other operations.''
    NRCS replaces the term, ``conservation plan'' with ``AMA plan of 
operations'' to ensure consistency across NRCS programs. Prior to this 
regulation, AMA participants developed and implemented an AMA plan of 
operations. The addition of this term and associated definition 
clarifies what constitutes an AMA plan of operations and clarifies 
existing processes and documentation procedures. An AMA plan of 
operations, which is part of the AMA contract, identifies the location 
and timing of conservation practices that the participant agrees to 
implement.
    NRCS revises the definition, ``applicant,'' to simplify the 
definition and incorporate the 2008 Act's references to ``person'' and 
``legal entity.'' The term, ``applicant,'' is defined as follows: ``a 
person, legal entity, or joint operation that has an interest in an 
agricultural operation, who has requested in writing to participate in 
AMA.''
    NRCS adds the definition, ``beginning farmer and rancher'' in 
accordance with Section 2708 of the 2008 Act which seeks to expand 
conservation program participation among farmers and ranchers who have 
been historically underserved. The definition of ``beginning farmer and 
rancher'' reflects the definition provided defined in 1201(a) of the 
Food Security Act of 1985. Generally speaking, a ``beginning farmer or 
rancher'' is an individual who has not operated a farm or ranch, or who 
has operated a farm or ranch for not more than 10 consecutive years. 
This requirement applies to all members of an entity, who will 
materially and substantially participate in the operation of the farm 
or ranch. NRCS also revises the ``conservation district'' definition to 
reflect the 2008 Act's definition. A conservation district means ``any 
district or unit of State, Tribal, or local government formed under 
State, Tribal, or territorial law for the express purpose of developing 
and carrying out a local soil and water conservation program.'' Such 
district or unit of government may be referred to as a ``conservation 
district,'' ``soil conservation district,'' ``soil and water 
conservation district,'' ``resource conservation district,'' ``natural 
resource district,'' ``land conservation committee,'' or similar name.
    NRCS revises ``conservation practice'' to clarify what is meant by 
conservation treatment. Specifically, a conservation practice means 
``one or more conservation improvements and activities, including 
structural practices, land management practices, vegetative practices, 
forest management, and other improvements that achieve program 
purposes.''
    NRCS revises the definition of ``contract'' in an effort to make 
definitions consistent across other programs. A contract is ``a legal 
document that specifies the rights and obligations of any participant 
in the program. An AMA contract is a binding agreement for the transfer 
of assistance from USDA to the participant to share in the costs of 
applying conservation practices.''
    The term, ``historically underserved producer,'' merges the terms 
``beginning farmer or rancher,'' ``limited resource farmer or 
rancher,'' and ``socially disadvantaged farmer or rancher'' into one 
definition to simplify terms within this regulation.
    NRCS revises the definition of ``Indian Tribe'' to ensure the 
definition incorporates Alaska Native village corporations, as 
established pursuant to the Alaska Claims Settlement Act (43 U.S.C. 
1601 et seq.).
    NRCS replaces the term and definition, ``Indian trust land,'' to 
make it consistent with the term and associated definition, ``Indian 
land,'' which is used by other NRCS conservation programs. The ``Indian 
land'' definition encompasses lands which are also held in fee title by 
Indian tribes or Tribal members. Specifically, ``Indian land'' is ``an 
inclusive term describing all lands held in trust by the United States 
for individual Indians or Tribes, or all lands, titles to which are 
held by individual Indians or Tribes, subject to Federal restrictions 
against alienation or encumbrance, or all lands which are subject to 
the rights of use, occupancy and/or benefit of certain Tribes.''
    NRCS adds the term, ``joint operation,'' to maintain consistency 
across all NRCS conservation programs. A joint operation is ``a general 
partnership, joint venture, or other similar business arrangement, in 
which the members are jointly or severally liable for the obligations 
of the organization.''
    NRCS adds the term, ``legal entity,'' to maintain consistency 
across all NRCS conservation programs. As defined by 7 CFR 1400, ``a 
legal entity is an entity created under Federal or State law that: (1) 
Owns land or an agricultural commodity, product, or livestock; or (2) 
produces an agricultural commodity, product, or livestock.''
    NRCS adds the term and associated definition ``limited resource 
farmer,'' in accordance with Section 2708 of the 2008 Act which seeks 
to expand conservation program participation among farmers and ranchers 
who have been historically underserved. The definition of ``limited 
resource farmer'' reflects the definition used in the Environmental 
Quality Incentive Program's regulation, 7 CFR part 1466. Generally 
speaking, a limited resource farmer is a person with direct or indirect 
gross farms sales not more than $155200 in each of the previous two 
years, who has a total household income at or below the national 
poverty level for a family of four, or less than 50 percent of the 
county median household income in each of the two previous years.
    NRCS revises the definition, ``liquidated damages,'' to make the 
definition consistent with the definition used by other NRCS 
conservation programs; however, the overall meaning of the term remains 
the same as the original regulation's definition. Liquidated damages is 
``a sum of money stipulated in the AMA contract that the participant 
agrees to pay NRCS if the participant fails to adequately complete the 
terms of the contract. The sum represents an estimate of the expenses 
incurred to service the contract and reflects the difficulties of proof 
of loss and the inconvenience or non-feasibility

[[Page 70248]]

of otherwise obtaining an adequate remedy.''
    NRCS adds the term, ``livestock,'' to maintain consistency across 
NRCS conservation programs. Livestock means ``all animals produced on 
farms and ranches, as determined by the Chief.'' NRCS adds the term, 
``Natural Resources Conservation Service,'' to define the USDA agency 
that has responsibility for administering AMA.
    NRCS adds the term, ``nonindustrial private forest land,'' to 
further define land eligible for AMA assistance. Nonindustrial forest 
land is rural land that has existing tree cover or is suitable for 
growing trees; and is owned by any nonindustrial private individual, 
group, association, corporation, Indian Tribe, or other private legal 
entity that has definitive decisionmaking authority over the land.
    NRCS adds the term ``operation and maintenance agreement'' to 
describe the document that, in conjunction with the AMA plan of 
operations, specifies the participant's operation and maintenance 
responsibilities for conservation practices installed with AMA 
assistance.
    NRCS revises the definition of ``participant,'' to make it 
consistent with other NRCS conservation programs. A participant is ``a 
person, joint operation, or legal entity who is receiving payment or is 
responsible for implementing an AMA contract's terms and conditions.''
    NRCS replaces the term, ``cost share payment'' with the term, 
``payment'' to more adequately describe how participants will be 
compensated. Payment means the ``financial assistance provided to the 
participant based on the estimated costs incurred in performing or 
implementing conservation practices, including costs for: planning, 
design, materials, equipment, installation, labor, maintenance, 
management, or training, as well as the estimated income foregone by 
the producer for the designated conservation practices.''
    NRCS adds the term, ``person,'' to maintain consistency across all 
NRCS conservation programs. As defined by 7 CFR part 1400, a person is 
``an individual, natural person and does not include a legal entity.''
    NRCS expands upon the definition of ``producer,'' to include 
persons or entities involved in forestry management.
    NRCS adds the term, ``resource concern,'' to maintain a consistency 
of terms across NRCS conservation programs. A resource concern is ``a 
specific natural resource problem that represents a significant concern 
in a State or region and is likely to be addressed successfully through 
the implementation of the conservation practices by producers.''
    NRCS adds the term, ``socially disadvantaged farmer or rancher,'' 
in accordance with Section 2708 of the 2008 Act which seeks to expand 
conservation program participation among farmers and ranchers who have 
been historically underserved. A socially disadvantaged famer or 
rancher is one ``who has been subjected to racial or ethnic prejudices 
because of their identity as a member of a group without regard to 
their individual qualities.''
    NRCS revises the definition, ``State Conservationist,'' to clarify 
that the former State Conservationist of Hawaii has become the director 
of the Pacific Islands.
    NRCS adds the term, ``structural practice,'' to better define a 
conservation practice that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
from degradation, or improve soil, water, air, or related natural 
resources in the most cost-effective manner.
    NRCS revises the term, ``technical assistance,'' to further clarify 
the nature of technical assistance under AMA, as well as the types of 
land where AMA technical assistance is available.
    NRCS adds the term and definition, ``Technical Service Provider 
(TSP)'' to clarify that participants may receive technical assistance 
from an individual, private-sector entity, or public agency certified 
by NRCS to provide technical services, in lieu of or on behalf of NRCS.

Section 1465.4, National Priorities

    NRCS inserts a new Sec.  1465.4, entitled ``National Priorities,'' 
and redesignates the subsequent sections accordingly. The new Sec.  
1465.4 provides that NRCS establishes national priorities to guide 
funding allocations to States, selection of AMA contracts, and 
implementation priority for AMA conservation practices. This new 
section also states that the national priorities are reviewed 
periodically by NRCS to ensure that the program is addressing priority 
conservation concerns. This addition improves AMA consistency with 
related conservation programs administered by NRCS.

Section 1465.5, Program Requirements

    Section 1465.5, ``Program requirements,'' sets forth land and 
applicant eligibility. Throughout the Section the terminology is 
revised to make it consistent with the terms used in Sec.  1465.3, 
``Definitions.''
    Specifically, NRCS revises paragraph (a), replacing the term, 
``cost share'' payment with the term, ``payment,'' to more adequately 
reflect the type of payments a participant may receive. NRCS also 
replaces the term, ``conservation plan,'' with the term, ``AMA plan of 
operations,'' to describe the specific document that contains the 
conservation practice implementation schedule.
    NRCS revises paragraph (c)(2), which requires that the applicant 
provide written evidence of ownership or legal control for the life of 
the contract and its associated O&M agreement, which is consistent with 
additions in Sec. Sec.  1465.3 and 1465.22. NRCS also revises paragraph 
(c)(4) to clarify that additional information required by NRCS is for 
the purposes of assessing a proposed project's merits and to assist in 
monitoring contract compliance.
    Section 1465.5 is revised to incorporate existing program 
requirements that previously have not been included in the AMA 
regulations because they apply via other statutory provisions. In 
particular, NRCS revises Sec.  1465.5(c)(6) to clarify that AMA 
participants are subject to AGI limitations, 7 CFR Part 1400 and 
amendments to Section 1001D of the Food Security Act of 1985 as 
authorized by Section 1604 of Title I of the 2008 Act. The AGI and 
program eligibility requirements also necessitate that NRCS obtain from 
legal entities a list of members, including members in embedded 
entities, along with their social security numbers, and percent 
interest in the legal entity. Specifically, text has been added to 
Sec.  1465.5, ``Program requirements,'' that requires participants to 
``supply other information, as required by NRCS, to determine payment 
eligibility as established by 7 CFR 1400, Adjusted Gross Income 
(AGI).'' This revision also makes AMA consistent with other NRCS 
conservation programs.
    Paragraph (c) is revised to further clarify that applicants must 
provide a list of all members of the legal entity and embedded entities 
along with members' social security numbers and percentage interest in 
the entity. In the event an applicant uses a unique identification 
number rather than a social security or tax identification number, the 
unique identification number must be used universally for any and all 
AMA contracts. The original subparagraph 1465.5(c)(4) has been removed 
as it is redundant with Sec.  1465.5(c)(6), and subparagraph 
1465.5(c)(5) has been redesignated as Sec.  1465.5(c)(8). Subparagraph 
1465.5(c)(10) is added to clarify that a participant must develop and 
agree to comply with an APO and to describe the

[[Page 70249]]

Agency expectation regarding the O&M agreement.
    NRCS adds new program requirements in paragraph (c)(9) to improve 
program administration and ensure that AMA program goals are met. A 
provision is added that requires AMA participants to be in compliance 
with terms of all other USDA-administered agreements to which they are 
a party. In this manner, NRCS ensures that a participant who receives 
NRCS conservation program benefits is meeting existing responsibilities 
prior to receiving additional assistance.
    Sections 1465.5(d)(2)(i) through Sec.  1465.5(d)(2)(iii) are 
redesignated as Sec.  1465.5(d)(2)(A), Sec.  1465.5(d)(2)(B), and Sec.  
1465.5(d)(2)(C), respectively. In an effort to make AMA consistent with 
other programs, the language contained within paragraph (d)(2) that 
addresses enrolling public land is slightly revised, although the 
overall intent of the language remains the same.

Section 1465.6, AMA Plan of Operations

    NRCS inserts a new section Sec.  1465.6, entitled ``AMA plan of 
operations,'' which describes the AMA plan of operations as the 
document that contains the information related to practices and 
activities to be implemented under AMA. Section 1465.6 specifies the 
requirements for the APO and that participants are responsible for 
implementing the APO. This addition brings AMA into alignment with 
other NRCS conservation programs. Subsequent sections are redesignated 
accordingly.

Section 1465.7, Conservation Practices

    Section 1465.7, ``Conservation practices,'' describes how NRCS 
determines eligible conservation practices. Specifically, Sec.  
1465.7(a) is revised to clarify that NRCS will identify and provide 
public notice of the conservation practices eligible for payments under 
the program. This revision improves AMA consistency with related NRCS 
conservation programs. The reference to ``State Technical Committees'' 
providing advice on the types of conservation practices eligible for 
payment is removed, since State Technical Committees are permitted only 
to provide advice on conservation programs, authorized by Title XII of 
the Food Security Act of 1985. AMA is authorized by the Federal Crop 
Insurance Act; therefore, State Technical Committees are not authorized 
to provide advice on AMA.

Subpart B--Contracts

Section 1465.20, Application for Participation and Selecting 
Applications for Contracting

    Section 1465.20, ``Application for participation and selecting 
applications for contracting,'' describes the processes for submitting 
and selecting applications. This Section remains the same; however, the 
term, ``national priorities,'' is inserted in paragraphs (c) and (d) to 
account for the policy outlined in Sec.  1465.4, ``National 
priorities.'' The reference to ``State Technical Committees'' providing 
advice on AMA ranking criteria is removed, since State Technical 
Committees are permitted only to provide advice on conservation 
programs, authorized by Title XII of the Food Security Act of 1985. AMA 
is authorized by the Federal Crop Insurance Act; therefore, State 
Technical Committees are not authorized to provide advice on AMA.

Section 1465.21, Contract Requirements

    Section 1466.21, ``Contract requirements,'' identifies elements 
contained within an AMA contract and the responsibilities of the 
participant who is party to the AMA contract. Specifically, paragraph 
(a) is revised to change the term ``cost-share payments'' to 
``payments,'' and clarify that costs related to technical services may 
be included in the contract. This revision does not change current 
program practice.
    Under Sec.  1465.21(b)(2), contract duration is revised from 3 to 
10 years to a minimum duration of one year after completion of the last 
practice, and a maximum of 10 years. This provides the flexibility 
needed for establishing agreement lengths based on conservation 
concerns and other factors, and aligns AMA with other conservation 
programs administered by NRCS.
    Overall, Sec.  1465.21(b) is restructured to account for additions 
to the section and to make the formatting consistent throughout the AMA 
regulations, although with the exception of replacing the terms, 
``contract and conservation plan'' with ``APO,'' the text has not 
changed. Accordingly, subparagraphs 1465.21(b)(3)(i) through 
1465.21(b)(3)(iv) are redesignated as 1465.21(b)(3)(A) through 
1465.21(b)(3)(D).

Section 1465.22, Conservation Practice Operation and Maintenance

    Section 1465.22, ``Conservation practice operation and 
maintenance,'' addresses the participant's responsibility for operating 
and maintaining conservation practices. Section 1465.22 is divided into 
logical content paragraphs and revised to be consistent with the O&M 
agreement definition in Sec.  1465.3. NRCS revised Sec.  1465.22 to 
clarify that the O&M agreement is part of the AMA contract. The O&M 
agreement specifies the terms and conditions under which the 
participant must operate and maintain the conservation practices 
installed with AMA assistance. This section also clarifies that NRCS 
may periodically inspect conservation practices to ensure that they are 
being maintained for the conservation practice lifespan as detailed in 
the O&M agreement. In the event that NRCS finds that a participant is 
not operating and maintaining practices for the specified lifespan 
during the contract duration, NRCS may request a refund of payments in 
accordance with the AMA contract. NRCS has created an O&M agreement to 
articulate the Agency's expectation that the participant is responsible 
for maintaining each conservation practice. NRCS has developed this O&M 
agreement for two reasons: (1) To increase transparency of a 
participant's contract responsibilities; and (2) To ensure these 
conservation practices are maintained for the length in time in which 
they were designed and created.
    NRCS adds Sec.  1465.22(d) to clarify to the participant that 
conservation practices installed before contract approval, but included 
in the application in order to obtain ranking points, must be operated 
and maintained as specified in the contract and O&M agreement. This 
addition is consistent with other NRCS conservation programs' policies.

Section 1465.23, Payments

    The Section title is revised from ``Cost-share payments'' to 
``Payments'' to reflect the variety of costs that are considered in 
establishing program payments. Accordingly, the term ``cost-share 
payment'' is replaced by ``payment'' throughout the Section. This 
section addresses payments and payment limitations applicable to a 
participant. Subparagraphs 1465.23(a)(1), 1465.23(a)(2), 1465.23(a)(3), 
1465.23(b), 1465.23(c), and 1465.23(d) are redesignated as 1465.23(a), 
1465.23(b), 1465.23(c), 1465.23(d), 1465.23(e), 1465.23(f), and 
1465.23(g), respectively, to accommodate additions to the section and 
to make the formatting consistent throughout the AMA regulations.
    Section 1465.23(a) is revised to allow payments of ``up to 75 
percent of the estimated cost of an eligible practice

[[Page 70250]]

and up to 100 percent of the estimated income foregone'' rather than 
providing a flat rate of 75 percent. Allowing for a range of payment 
rates makes it possible to provide reduced rates where participants can 
implement a conservation practice at a lower cost. This allows the 
opportunity to distribute AMA funds to more participants. A new section 
1465.23(a)(2) is added to allow historically underserved producers to 
receive the applicable payment rate plus an additional rate that is not 
less than 25 percent, provided that this increase does not exceed 90 
percent. These changes implement the 2008 Act's emphasis on encouraging 
participation by those who have been historically underserved and are 
consistent with other related NRCS conservation programs.
    Section 1465.23(c) is revised to clarify how conservation practices 
implemented or initiated prior to AMA contract approval will be 
handled. Section 1465.23(c)(1) states that payments will not be made 
for practices applied prior to contract approval. Section 1465.23(c)(2) 
describes that practices initiated prior to contract approval are not 
eligible for payment, unless the participant had obtained a waiver in 
advance from the State or Designated Conservationist. This revision 
aligns AMA with other NRCS-administered conservation programs.
    NRCS revises Sec.  1465.23(e) as follows: Sec.  1465.23(e) is 
expanded to include the statutory reference of the ``Payment Limitation 
and Payment Eligibility'' at 7 CFR part 1400. NRCS will attribute 
payments to each participating person and legal entity using the same 
protocol outlined in 7 CFR part 1400 for commodity and conservation 
programs. This is consistent with other conservation programs 
administered by NRCS. Subparagraphs 1465.23(c)(i) through 
1465.23(c)(iv) are removed as the majority of the provisions are 
addressed by reference to 7 CFR part 1400 in the Section.
    Section 1465.23(f) is added to state that payments will not be made 
for conservation practices on eligible land if payments are already 
being received for the same practice on the same land under a USDA 
conservation program. These additions are consistent with other related 
conservation programs administered by NRCS.
    Section 1465.23(h) is added to state that subject to fund 
availability, the payment rates for conservation practices scheduled 
after the year of contract obligation may be adjusted to reflect 
increased costs. NRCS adds this paragraph to enable the Agency to 
adjust payments to accommodate for inflation, higher fuel costs, and 
increased labor, which impact the cost of implementing a conservation 
practice.

Section 1465.24, Contract Modifications, Extensions, and Transfers of 
Land

    Section 1465.24, ``Contract modifications, extensions, and 
transfers of land,'' addresses contract modifications, changes in land 
ownership or control of the land, and contract implications if the 
participant loses control of the land. Specifically, Sec.  1465.24(a) 
is revised to state that when an AMA contract is revised, the APO also 
must be revised. The designated conservationist must approve the 
modified contract. This new language is consistent with modifications 
made in Sec.  1465.6 and with other conservation programs administered 
by NRCS.
    Language related to contract extensions for up to the 10-year limit 
is deleted in Sec.  1465.24(b) because contract duration is addressed 
in Sec.  1465.21(b)(2). New language is included to clarify that 
participants are responsible for notifying NRCS if they anticipate loss 
of control of the land. This addition is consistent with other related 
conservation programs administered by NRCS.
    Section 1465.24(c) is revised to clarify contract transfer issues 
related to division of payments and transferee eligibility. 
Subparagraphs 1465.24(c)(1) and 1465.24(c)(2) explain the requirements 
for a transferee to receive payments, the obligations of the transferee 
to comply with the terms of the contract and O&M agreement, and the 
rights of the parties in distribution of payments. This revision brings 
AMA into alignment with related conservation programs administered by 
NRCS.
    Section 1465.24(e) is added to clarify that participants to a 
contract will be jointly and severally responsible for refunding 
payments. The language is consistent with related NRCS-administered 
conservation programs.
    Section 1465.24(f) is added to ensure that in the event a 
conservation practice fails through no fault of the participant, the 
State Conservationist may issue payments to re-establish the 
conservation practice, in accordance with established payment rates and 
limitations.

Section 1465.25, Contract Violations and Terminations

    Section 1465.25, ``Contract violations and terminations,'' 
addresses the procedures that NRCS takes where a violation has occurred 
or a contract termination is necessary. Section 1465.25 is revised to 
account for additions to the Section and to make the formatting 
consistent throughout the AMA regulations. Section 1465.25(a) is 
revised by removing the term ``reasonable'' as it is too subjective and 
replaces it with ``60 days, unless otherwise determined by the State 
Conservationist.'' This language is consistent with related NRCS-
administered conservation programs. Subparagraphs 1465.25(a)(1) and 
1465.25(a)(2) are redesignated as Sec.  1465.25(a) and Sec.  
1465.25(b), respectively.
    The terms ``scheme or device'' are added to Sec.  1465.25(b) to be 
clear that such actions may result in contract violation or 
termination. This revision is consistent with Sec.  1465.35 and with 
related conservation programs administered by NRCS. Subparagraphs 
1465.25(b)(1), 1465.25(b)(2), 1465.25(b)(3), 1465.25(b)(4), and 
1465.25(b)(5) are redesignated as 1465.25(c), 1465.25(c)(2), 
1465.25(c)(2)(A), 1465.25(c)(2)(B), and 1465.25(c)(2)(C), respectively.
    Section 1465.25(c) is revised as follows: Sec.  1465.25(c) is 
expanded to clarify that participants who are in violation of AMA 
contracts may be ineligible for future NRCS-administered conservation 
program funding. The language is consistent with other NRCS 
conservation programs. Subparagraph 1465.25(c)(2)(A) is revised to 
clarify that hardship claims must be well documented and must result 
from conditions that did not exist prior to application to the program. 
This revision is consistent with related conservation programs 
administered by NRCS.

Subpart C--General Administration

Section 1465.30, Appeals

    Section 1465.30, ``Appeals,'' references the policies that govern 
when a producer seeks an appeal to an adverse decision made by NRCS. 
NRCS has not made any substantive changes to this section, other than 
formatting. The following formatting changes are made to Sec.  1465.30: 
Sec.  1465.30(b)(4)(i) through Sec.  1465.30(b)(4)(iii) are 
redesignated as Sec.  1465.30(b)(4)(A), Sec.  1465.30(b)(4)(B), and 
Sec.  1465.30(b)(4)(C), respectively.

Section 1465.31, Compliance With Regulatory Measures

    No changes have been made in this section.

[[Page 70251]]

Section 1465.32, Access to Operating Unit

    Section 1465.32, ``Access to operating unit,'' provides notice to 
applicants, participants, and the public that NRCS has the right to 
enter an operating unit or tract for the purpose of ascertaining the 
accuracy of any representations related to contract performance. 
Section 1465.32 is amended to notify potential AMA applicants that an 
authorized NRCS representative may enter an agricultural operation for 
the purposes of eligibility determinations. NRCS will continue to 
provide the participant notice, prior to entering the property.

Section 1465.33, Equitable Relief

    The caption of Sec.  1465.33 is changed from ``Performance based 
upon advice or action or representatives of NRCS'' to ``Equitable 
relief'' to be consistent with related NRCS-administered conservation 
programs. Section 1465.33, ``Equitable relief,'' outlines the policy 
when a participant relies upon erroneous advice provided by NRCS. 
Specifically, Sec.  1465.33 is divided into two paragraphs. Paragraph 
1465.33(b) is revised to add that any action the participant has taken 
based on the advice of a certified TSP is the responsibility of that 
certified TSP. The language clarifies program administration and is 
consistent with other NRCS conservation programs.
    Paragraph 1465.33(c) clarifies that AMA participants who acted in 
good faith based on erroneous information provided by NRCS or its 
representatives may be entitled to equitable relief. This revision 
makes AMA consistent with other conservation programs administered by 
NRCS.

Section 1465.34, Offsets and Assignments

    Section 1465.34, ``Offsets and assignments,'' governs offsets and 
withholdings, as well as assignment of payments. The term ``person'' is 
changed to ``participant'' to reflect that this policy applies to 
persons, joint operations, and legal entities who are party to an AMA 
contract.

Section 1465.35, Misrepresentation and Scheme or Device

    Section 1465.35, ``Misrepresentation and scheme or device,'' 
outlines the policies governing producers who have erroneously or 
fraudulently represented themselves. Section 1465.35 is revised to 
improve transparency related to the participant actions and 
consequences of engaging in misrepresentation or scheme or device. This 
revision aligns AMA with other NRCS conservation programs.
    Paragraph 1465.35(b) expands on the actions that may be deemed 
misrepresentation or scheme or device to include any action intended to 
deprive a tenant or sharecropper of entitled payments. These revisions 
are consistent with other NRCS conservation programs.
    Paragraph 1465.35(c) is added to clarify that if paragraphs Sec.  
1465.35(a) or Sec.  1465.35(b) apply to a participant, their interest 
in all contracts will be terminated and they may be determined 
ineligible for future funding from any NRCS conservation programs.

Section 1465.36, Environmental Services Credits for Conservation 
Improvements

    Section 1465.36 is added to provide clarity related to 
environmental credits that may be produced on lands under AMA 
contracts. It establishes that NRCS asserts no interest in credits 
earned, but that the Agency retains the authority to ensure that the 
requirements for AMA-funded improvements are met and maintained 
consistent with the terms of the contract. Where activities may affect 
the land covered by an AMA contract, participants are highly encouraged 
to request a compatibility assessment from NRCS prior to entering into 
any environmental credit agreements. This provision is consistent with 
other conservation programs administered by NRCS.

List of Subjects in 7 CFR Part 1465

    Conservation contract, Conservation plan, Conservation practices, 
Soil and water conservation.

0
For the reasons stated in the preamble, the Natural Resources 
Conservation Service revises Part 1465 of Title 7 of the Code of 
Federal Regulations to read as follows:

PART 1465--AGRICULTURAL MANAGEMENT ASSISTANCE

Subpart A--General Provisions
Sec.
1465.1 Purposes and applicability.
1465.2 Administration.
1465.3 Definitions.
1465.4 National priorities.
1465.5 Program requirements.
1465.6 AMA plan of operations.
1465.7 Conservation practices.
Subpart B--Contracts
1465.20 Applications for participation and selecting applications 
for contracting.
1465.21 Contract requirements.
1465.22 Conservation practice operation and maintenance.
1465.23 Payments.
1465.24 Contract modification, extension, and transfer of land.
1465.25 Contract violations and termination.
Subpart C--General Administration
1465.30 Appeals.
1465.31 Compliance with regulatory measures.
1465.32 Access to operating unit.
1465.33 Equitable relief.
1465.34 Offsets and assignments.
1465.35 Misrepresentation and scheme or device.
1465.36 Environmental Services Credits for Conservation 
Improvements.

    Authority: 7 U.S.C. 1524(b).

Subpart A--General Provisions


Sec.  1465.1  Purposes and applicability.

    Through the Agricultural Management Assistance program (AMA), the 
Natural Resources Conservation Service (NRCS) provides financial 
assistance funds annually to producers in 16 statutorily designated 
States to: Construct or improve water management structures or 
irrigation structures; plant trees to form windbreaks or to improve 
water quality; and mitigate risk through production diversification or 
resource conservation practices, including soil erosion control, 
integrated pest management, or the transition to organic farming. AMA 
is applicable in Connecticut, Delaware, Hawaii, Maine, Maryland, 
Massachusetts, Nevada, New Hampshire, New Jersey, New York, 
Pennsylvania, Rhode Island, Utah, Vermont, West Virginia, and Wyoming.


Sec.  1465.2  Administration.

    (a) Administration and implementation of the conservation 
provisions of AMA for the Commodity Credit Corporation (CCC) is 
assigned to the NRCS, using the funds, facilities, and authorities of 
the CCC. Accordingly, where NRCS is mentioned in this Part, it also 
refers to the CCC's funds, facilities, and authorities, where 
applicable.
    (b) NRCS will:
    (1) Provide overall management and implementation leadership for 
AMA;
    (2) Establish policies, procedures, priorities, and guidance for 
implementation;
    (3) Establish payment limits;
    (4) Determine eligible practices;
    (5) Develop and approve AMA plans of operation and contracts with 
selected participants;
    (6) Provide technical leadership for implementation, quality 
assurance, and evaluation of performance;
    (7) Make funding decisions and determine allocations of AMA funds; 
and
    (8) Issue payments for conservation practices completed.

[[Page 70252]]

    (c) No delegation in this part to lower organizational levels shall 
preclude the Chief of NRCS from determining any issues arising under 
this Part or from reversing or modifying any determination made under 
this Part.


Sec.  1465.3  Definitions.

    The following definitions apply to this part and all documents used 
in accordance with this part, unless specified otherwise:
    Agricultural land means cropland, grassland, rangeland, pasture, 
and other agricultural land on which agricultural or forest-related 
products or livestock are produced. Other agricultural lands may 
include cropped woodland, marshes, incidental areas included in the 
agricultural operation, and other types of agricultural land used for 
production of livestock.
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, which the producer is listed as the 
operator or owner/operator in the Farm Service Agency (FSA) record 
system, which is under the effective control of the producer at the 
time the producer applies for a contract, and which is operated by the 
producer with equipment, labor, management, and production, forestry, 
or cultivation practices that are substantially separate from other 
operations.
    AMA plan of operations (APO) means the document that identifies the 
location and timing of conservation practices that the participant 
agrees to implement on eligible land in order to address the resource 
concerns and program purposes. The APO is part of the AMA contract.
    Applicant means a person, legal entity, or joint operation that has 
an interest in an agricultural operation, as defined in 7 CFR 1400, who 
has requested in writing to participate in AMA.
    Beginning farmer or rancher means a person or legal entity who:
    (1) Has not operated a farm or ranch, or who has operated a farm or 
ranch for not more than 10 consecutive years. This requirement applies 
to all members of an entity who will materially and substantially 
participate in the operation of the farm or ranch.
    (2) In the case of a contract with an individual, individually or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm or ranch is located.
    (3) In the case of a contract with an entity or joint operation, 
all members must materially and substantially participate in the 
operation of the farm or ranch. Material and substantial participation 
requires that each of the members provide some amount of the 
management, or labor and management necessary for day-to-day 
activities, such that if each of the members did not provide these 
inputs, operation of the farm or ranch would be seriously impaired.
    Chief means the Chief of NRCS, United States Department of 
Agriculture (USDA), or designee.
    Conservation district means any district or unit of State, Tribal, 
or local government formed under State, Tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``natural resource district,'' ``land 
conservation committee,'' or similar name.
    Conservation practice means one or more conservation improvements 
and activities, including structural practices, land management 
practices, vegetative practices, forest management, and other 
improvements that achieve program purposes.
    Contract means a legal document that specifies the rights and 
obligations of any participant accepted into the program. An AMA 
contract is a binding agreement for the transfer of assistance from 
USDA to the participant to share in the costs of applying conservation 
practices.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for AMA administration in 
a specific area.
    Historically underserved producer means an eligible person, joint 
operation, or legal entity who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, or limited resource farmer or 
rancher.
    Indian land is an inclusive term describing all lands held in trust 
by the United States for individual Indians or Tribes, or all lands, 
titles to which are held by individual Indians or Tribes, subject to 
Federal restrictions against alienation or encumbrance, or all lands 
which are subject to the rights of use, occupancy and/or benefit of 
certain Tribes. For purposes of this Part, the term Indian land also 
includes land for which the title is held in fee status by Indian 
tribes, and the U.S. Government-owned land under the Bureau of Indian 
Affairs jurisdiction.
    Indian Tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) 
that is eligible for the special programs and services provided by the 
United States to Indians because of their status as Indians.
    Joint operation means, as defined in 7 CFR part 1400, a general 
partnership, joint venture, or other similar business arrangement in 
which the members are jointly and severally liable for the obligations 
of the organization.
    Legal entity means, as defined in 7 CFR part 1400, an entity 
created under Federal or State law that:
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Lifespan means the period of time in which a conservation practice 
should be operated and maintained and used for the intended purpose.
    Limited resource farmer or rancher means:
    (1) A person with direct or indirect gross farm sales of not more 
than $155,200 in each of the previous two years (adjusted for inflation 
using the Prices Paid by Farmer Index as compiled by the National 
Agricultural Statistics Service), and
    (2) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous two years (to be determined 
annually using Commerce Department data).
    Liquidated damages means a sum of money stipulated in the AMA 
contract that the participant agrees to pay NRCS if the participant 
fails to adequately complete the terms of the contract. The sum 
represents an estimate of the expenses incurred to service the contract 
and reflects the difficulties of proof of loss and the inconvenience or 
non-feasibility of otherwise obtaining an adequate remedy.
    Livestock means all animals produced on farms and ranches, as 
determined by the Chief.
    Natural Resources Conservation Service (NRCS) is an agency of the 
USDA, which has responsibility for administering AMA using the funds, 
facilities, and authorities of the CCC.
    Nonindustrial private forest land means rural land that has 
existing tree cover or is suitable for growing trees; and is owned by 
any nonindustrial private individual, group, association, corporation, 
Indian Tribe, or other

[[Page 70253]]

private legal entity that has definitive decision-making authority over 
the land.
    Operation and maintenance means work performed by the participant 
to keep the applied conservation practice functioning for the intended 
purpose during the conservation practice lifespan. Operation includes 
the administration, management, and performance of non-maintenance 
actions needed to keep the completed practice safe and functioning as 
intended. Maintenance includes work to prevent deterioration of the 
practice, repairing damage, or replacement of the practice to its 
original condition if one or more components fail.
    Operation and maintenance (O&M) agreement means the document that, 
in conjunction with the APO, specifies the operation and maintenance 
responsibilities of the participants for conservation practices 
installed with AMA assistance.
    Participant means a person, legal entity, or joint operation who is 
receiving payment or is responsible for implementing the terms and 
conditions of an AMA contract.
    Payment means the financial assistance provided to the participant 
based on the estimated costs incurred in performing or implementing 
conservation practices, including costs for: Planning, design, 
materials, equipment, installation, labor, maintenance, management, or 
training, as well as the estimated income foregone by the producer for 
the designated conservation practices.
    Person means, as defined in 7 CFR part 1400, an individual, natural 
person and does not include a legal entity.
    Producer means a person, legal entity, or joint operation who has 
an interest in the agricultural operation, according to 7 CFR part 
1400, or who is engaged in agricultural production or forestry 
management.
    Resource concern means a specific natural resource problem that 
represents a significant concern in a State or region and is likely to 
be addressed successfully through the implementation of the 
conservation practices by producers.
    Secretary means the Secretary of the USDA.
    Socially disadvantaged farmer or rancher means a farmer or rancher 
who has been subjected to racial or ethnic prejudices because of their 
identity as a member of a group without regard to their individual 
qualities.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area, or the 
Pacific Island Area.
    Structural practice means a conservation practice, including a 
vegetative practice, that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
from degradation, or improve soil, water, air, or related natural 
resources in the most cost-effective manner. Examples include, but are 
not limited to, animal waste management facilities, terraces, grassed 
waterways, tailwater pits, livestock water developments, contour grass 
strips, filterstrips, critical area plantings, tree plantings, 
establishment or improvement of wildlife habitat, and capping of 
abandoned wells.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural resources on land 
active in agricultural, forestry, or related uses. The term includes 
the following: (1) Technical services provided directly to farmers, 
ranchers, and other eligible entities, such as conservation planning, 
technical consultation, and assistance with design and implementation 
of conservation practices; and (2) technical infrastructure, including 
activities, processes, tools, and agency functions needed to support 
delivery of technical services, such as technical standards, resource 
inventories, training, data, technology, monitoring, and effects 
analyses.
    Technical Service Provider (TSP) means an individual, private-
sector entity, or public agency certified by NRCS to provide technical 
services to program participants or in lieu of or on behalf of NRCS.


Sec.  1465.4  National priorities.

    (a) The Chief, with advice from State Conservationists, will 
identify national priorities to achieve the conservation objectives of 
AMA.
    (b) National priorities will be used to guide annual funding 
allocations to States.
    (c) State Conservationists will use national priorities in 
conjunction with State and local priorities to prioritize and select 
AMA applications for funding.
    (d) NRCS will undertake periodic reviews of the national priorities 
and the effects of program delivery at the State and local level to 
adapt the program to address emerging resource issues.


Sec.  1465.5  Program requirements.

    (a) Participation in AMA is voluntary. The participant, in 
cooperation with the local conservation district, applies for practice 
installation for the agricultural operation. The NRCS provides payments 
through contracts to apply needed conservation practices within a time 
schedule specified in the APO.
    (b) The Chief determines the funds available for financial 
assistance according to the purpose and projected cost for which the 
financial assistance is provided in a fiscal year. The Chief allocates 
the funds available to carry out AMA in consideration of national 
priorities established under Sec.  1465.4.
    (c) To be eligible to participate in AMA, an applicant must:
    (1) Own or operate an agricultural operation within an applicable 
State, as listed in Sec.  1465.1;
    (2) Provide NRCS with written evidence of ownership or legal 
control for the life of the proposed contract, including the O&M 
agreement. An exception may be made by the Chief:
    (i) In the case of land allotted by the Bureau of Indian Affairs 
(BIA), Tribal land, or other instances in which the Chief determines 
that there is sufficient assurance of control; or
    (ii) If the applicant is a tenant of the land involved in 
agricultural production, the applicant shall provide NRCS with the 
written concurrence of the landowner in order to apply a structural 
practice(s);
    (3) Submit an application form NRCS-CPA-1200, which is located 
electronically at http://www.nrcs.usda.gov/programs/AMA/index.html;
    (4) Agree to provide all information to NRCS determined to be 
necessary to assess the merits of a proposed project and to monitor 
contract compliance;
    (5) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment;
    (6) Supply other information, as required by NRCS, to determine 
payment eligibility as established by 7 CFR part 1400, Adjusted Gross 
Income (AGI);
    (7) With regard to any participant that utilizes a unique 
identification number as an alternative to a tax identification number 
will utilize only that identifier for any and all other AMA contracts 
to which the participant is a party. Violators will be considered to 
have provided fraudulent representation and be subject to full 
penalties of Sec.  1465.25;
    (8) States, political subdivisions, and entities thereof will not 
be persons eligible for payment. Any cooperative

[[Page 70254]]

association of producers that markets commodities for producers shall 
not be considered to be a person eligible for payment;
    (9) Be in compliance with the terms of all other USDA-administered 
conservation program agreements to which the participant is a party; 
and
    (10) Develop and agree to comply with an APO and O&M agreement, as 
described in Sec.  1465.3.
    (d) Land may only be considered for enrollment in AMA if NRCS 
determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is a working component of the participant's 
agricultural and forestry operation; and
    (ii) The participant has control of the land for the term of the 
contract; and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern that is on private land; or
    (3) The land is federally recognized Tribal, BIA allotted, or 
Indian land.


Sec.  1465.6  AMA plan of operations.

    (a) All conservation practices in the APO must be approved by NRCS 
and developed and carried out in accordance with the applicable NRCS 
technical guidance.
    (b) The participant is responsible for implementing the APO.
    (c) The APO must include:
    (1) A description of the participant's specific conservation and 
environmental objectives to be achieved;
    (2) To the extent practicable, the quantitative or qualitative 
goals for achieving the participant's conservation and environmental 
objectives;
    (3) A description of one or more conservation practices in the 
conservation system, including conservation planning, design, or 
installation activities, to be implemented to achieve the conservation 
and environmental objectives;
    (4) A description of the schedule for implementing the conservation 
practices, including timing, sequence, operation, and maintenance; and
    (5) Information that will enable evaluation of the effectiveness of 
the plan in achieving the environmental objectives.
    (d) An APO may be modified in accordance with Sec.  1465.24.


Sec.  1465.7  Conservation practices.

    (a) The State Conservationist will determine the conservation 
practices eligible for AMA payments. To be considered eligible 
conservation practices, the practices must meet the purposes of the AMA 
as set out in Sec.  1465.1. A list of eligible practices will be 
available to the public.
    (b) The APO includes the schedule of operations, activities, and 
payment rates of the practices needed to solve identified natural 
resource concerns.

Subpart B--Contracts


Sec.  1465.20  Applications for participation and selecting 
applications for contracting.

    (a) Any producer who has eligible land may submit an application 
for participation in AMA at a USDA service center. Producers who are 
members of a joint operation shall file a single application for the 
joint operation.
    (b) NRCS will accept applications throughout the year. The State 
Conservationist will distribute information on the availability of 
assistance, national priorities, and the State-specific goals. 
Information will be provided that explains the process to request 
assistance.
    (c) The State Conservationist will develop ranking criteria and a 
ranking process to select applications, taking into account national, 
State, Tribal, and local priorities.
    (d) The State Conservationist or designated conservationist using a 
locally led process will evaluate, rank and select applications for 
contracting based on the State-developed ranking criteria and ranking 
process.
    (e) The State Conservationist or designated conservationist will 
work with the applicant to collect the information necessary to 
evaluate the application using the ranking criteria.


Sec.  1465.21  Contract requirements.

    (a) In order for a participant to receive payments, the participant 
shall enter into a contract agreeing to implement one or more eligible 
conservation practices. Costs for technical services may be included in 
the contract.
    (b) An AMA contract will:
    (1) Incorporate by reference all portions of an agricultural 
operation receiving AMA assistance;
    (2) Be for a minimum duration of one year after completion of the 
last practice, but not more than 10 years;
    (3) Incorporate all provisions as required by law or statute, 
including participant requirements to:
    (i) Not conduct any practices on the agricultural operation that 
would tend to defeat the purposes of the contract according to Sec.  
1465.25;
    (ii) Refund any AMA payments received with interest, and forfeit 
any future payments under AMA, on the violation of a term or condition 
of the contract, consistent with the provisions of Sec.  1465.25;
    (iii) Refund all AMA payments received on the transfer of the right 
and interest of the producer in land subject to the contract, unless 
the transferee of the right and interest agrees to assume all 
obligations, including operation and maintenance of the AMA contract's 
conservation practices, consistent with the provisions of Sec.  
1465.24; and
    (iv) Supply information as required by NRCS to determine compliance 
with the contract and requirements of AMA.
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec.  1465.22; and
    (5) Specify any other provision determined necessary or appropriate 
by NRCS.
    (c) The participant must apply the practice(s) according to the 
schedule set out in the APO.


Sec.  1465.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the O&M agreement that describes 
the lifespan and operation and maintenance of the conservation 
practices applied under the contract.
    (b) The O&M agreement incorporates the Agency expectation that the 
participant will operate and maintain the conservation practice(s) 
installed under the contract for its intended purpose for the lifespan 
of the conservation practice, as specified in the O&M agreement.
    (c) NRCS may periodically inspect the conservation practice(s) 
during the contract duration to ensure that operation and maintenance 
requirements are being carried out, and that the conservation practice 
is fulfilling its intended objectives.
    (d) Conservation practices installed before the contract execution, 
but included in the contract to obtain the environmental benefits 
agreed upon, must be operated and maintained as specified in the 
contract and O&M agreement.


Sec.  1465.23  Payments.

    (a) The Federal share of payments to a participant will be:
    (1) Up to 75 percent of the estimated incurred cost or 100 percent 
of the estimated income foregone of an eligible practice, except as 
provided in paragraph (a)(2) of this section.
    (2) In the case of historically underserved producers, the payment 
rate will be the applicable rate and an additional rate that is not 
less than 25

[[Page 70255]]

percent above the applicable rate, provided that this increase does not 
exceed 90 percent of the estimated incurred costs or estimated income 
foregone.
    (3) In no instance shall the total financial contributions for an 
eligible practice from other sources exceed 100 percent of the 
estimated incurred cost of the practice.
    (b) Participants may contribute their portion of the estimated 
costs of practices through in-kind contributions, including labor and 
materials, providing the materials contributed meet the NRCS standard 
and specifications for the practice being installed.
    (c) Payments for practices applied prior to application or contract 
approval--
    (1) Payments will not be made to a participant for a conservation 
practice that was applied prior to application for the program.
    (2) Payments will not be made to a participant for a conservation 
practice that was initiated or implemented prior to contract approval, 
unless the participant obtained a waiver from the State Conservationist 
or designated conservationist prior to practice implementation
    (d) The total amount of payments paid to a participant under this 
Part may not exceed $50,000 for any fiscal year.
    (e) For purposes of applying the payment limitations provided for 
in this section, NRCS will use the provisions in 7 CFR part 1400, 
Payment Limitation and Payment Eligibility.
    (f) A participant will not be eligible for payments for 
conservation practices on eligible land if the participant receives 
payments or other benefits for the same practice on the same land under 
any other conservation program administered by USDA.
    (g) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before NRCS will 
approve any Payment.
    (h) Subject to fund availability, the payment rates for 
conservation practices scheduled after the year of contract obligation 
may be adjusted to reflect increased costs.


Sec.  1465.24  Contract modifications, extensions, and transfers of 
land.

    (a) The participant and NRCS may modify a contract if both parties 
agree to the contract modification, the APO is revised in accordance 
with NRCS requirements, and the designated conservationist approves the 
modified contract.
    (b) It is the participant's responsibility to notify NRCS when he/
she either anticipates the voluntary or involuntary loss of control of 
the land.
    (c) The participant and NRCS may mutually agree to transfer a 
contract to another party.
    (1) To receive an AMA payment, the transferee must be determined by 
NRCS to be eligible to participate in AMA and shall assume full 
responsibility under the contract, including the O&M agreement for 
those conservation practices already installed and those conservation 
practices to be installed as a condition of the contract.
    (2) With respect to any and all payment owed to participants who 
wish to transfer ownership or control of land subject to a contract, 
the division of payment shall be determined by the original party and 
the party's successor. In the event of a dispute or claim on the 
distribution of payments, NRCS may withhold payments without the 
accrual of interest pending a settlement or adjudication on the rights 
to the funds.
    (d) NRCS may require a participant to refund all or a portion of 
any assistance earned under AMA if the participant sells or loses 
control of the land under an AMA contract and the successor in interest 
is not eligible or refuses to accept future payments to participate in 
the AMA or refuses to assume responsibility under the contract.
    (e) The participants to the contract shall be jointly and severally 
responsible for refunding the payments with applicable interest 
pursuant to paragraph (d) of this section.
    (f) In the event a conservation practice fails through no fault of 
the participant, the State Conservationist may issue payments to re-
establish the conservation practice, at the rates established in 
accordance with Sec.  1465.23, provided such payments do not exceed the 
payment limitation requirements as set forth in Sec.  1465.23.


Sec.  1465.25  Contract violations and termination.

    (a) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or documents incorporated by 
reference into the contract, NRCS shall give the participant notice and 
60 days, unless otherwise determined by the State Conservationist, to 
correct the violation and comply with the terms of the contract and 
attachments thereto. If a participant continues in violation, the State 
Conservationist may terminate the AMA contract.
    (b) Notwithstanding the provisions of paragraph (a) of this 
section, a contract termination shall be effective immediately upon a 
determination by the State Conservationist that the participant has 
submitted false information or filed a false claim, or engaged in any 
act, scheme, or device for which a finding of ineligibility for 
payments is permitted under the provisions of Sec.  1465.35, or in a 
case in which the actions of the party involved are deemed to be 
sufficiently purposeful or negligent to warrant a termination without 
delay.
    (c) If NRCS terminates a contract, the participant shall forfeit 
all rights to future payments under the contract and refund all or part 
of the payments received, plus interest. Participants violating AMA 
contracts may be determined ineligible for future NRCS-administered 
conservation program funding.
    (1) The State Conservationist may require only a partial refund of 
the payments received if the State Conservationist determines that a 
previously installed conservation practice can function independently, 
is not affected by the violation or the absence of other conservation 
practices that would have been installed under the contract, and the 
participant agrees to operate and maintain the installed conservation 
practice for the life span of the practice.
    (2) If NRCS terminates a contract due to breach of contract or the 
participant voluntarily terminates the contract before any contractual 
payments have been made, the participant shall forfeit all rights for 
further payments under the contract and shall pay such liquidated 
damages as prescribed in the contract. The State Conservationist will 
have the option to waive the liquidated damages depending upon the 
circumstances of the case.
    (i) When making all contract termination decisions, NRCS may reduce 
the amount of money owed by the participant by a proportion that 
reflects the good faith effort of the participant to comply with the 
contract or the existence of hardships beyond the participant's control 
that have prevented compliance with the contract. If the participant 
claims hardship, that claim must be well documented and cannot have 
existed when the applicant applied for participation in the program.
    (ii) The participant may voluntarily terminate a contract if NRCS 
agrees based on NRCS's determination that termination is in the public 
interest.
    (iii) In carrying out NRCS's role in this section, NRCS may consult 
with the local conservation district.

[[Page 70256]]

Subpart C--General Administration


Sec.  1465.30  Appeals.

    (a) A participant may obtain administrative review of an adverse 
decision under AMA in accordance with 7 CFR parts 11 and 614, except as 
provided in paragraph (b) of this section.
    (b) The following decisions are not appealable:
    (1) Payment rates, payment limits;
    (2) Funding allocations;
    (3) Eligible conservation practices; and
    (4) Other matters of general applicability, including:
    (i) Technical standards and formulas;
    (ii) Denial of assistance due to lack of funds or authority; or
    (iii) Science-based formulas and criteria.


Sec.  1465.31  Compliance with regulatory measures.

    Participants who carry out conservation practices shall be 
responsible for obtaining the authorities, rights, easements, permits, 
or other approvals necessary for the implementation, operation, and 
maintenance of the conservation practices in keeping with applicable 
laws and regulations. Participants shall be responsible for compliance 
with all laws and for all effects or actions resulting from the 
participant's performance under the contract.


Sec.  1465.32  Access to operating unit.

    Any authorized NRCS representative shall have the right to enter an 
operating unit or tract for the purpose of determining eligibility and 
for ascertaining the accuracy of any representations related to 
contracts and performance. Access shall include the right to provide 
technical assistance; determine eligibility; inspect any work 
undertaken under the contracts, including the APO and O&M agreement; 
and collect information necessary to evaluate the conservation practice 
performance as specified in the contracts. The NRCS representative 
shall make an effort to contact the participant prior to exercising 
this provision.


Sec.  1465.33  Equitable relief.

    (a) If a participant relied upon the advice or action of any 
authorized NRCS representative and did not know, or have reason to 
know, that the action or advice was improper or erroneous, the State 
Conservationist may grant relief to the extent it is deemed appropriate 
by NRCS. Where a participant believes that detrimental reliance on the 
advice or action of a NRCS representative resulted in an ineligibility 
or program violation, the participant may request equitable relief 
under 7 CFR part 635.
    (b) The financial or technical liability for any action by a 
participant that was taken based on the advice of an NRCS certified 
non-USDA TSP is the responsibility of the certified TSP and will not be 
assumed by NRCS when NRCS authorizes payment.
    (c) If, during the term of an AMA contract, a participant has been 
found in violation of a provision of the contract, the O&M agreement, 
or any document incorporated by reference through failure to fully 
comply with that provision, the participant may be eligible for 
equitable relief under 7 CFR part 635.


Sec.  1465.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any 
payment or portion thereof to any participant shall be made without 
regard to questions of title under State law and without regard to any 
claim or lien against the crop, or proceeds thereof, in favor of the 
owner or any other creditor except agencies of the United States 
Government. The regulations governing offsets and withholdings found at 
7 CFR part 1403 shall be applicable to contract payments.
    (b) AMA participants may assign any payments in accordance with 7 
CFR part 1404.


Sec.  1465.35  Misrepresentation and scheme or device.

    (a) A participant who is determined to have erroneously represented 
any fact affecting an AMA determination made in accordance with this 
part shall not be entitled to contract payments and must refund to NRCS 
all payments plus interest, as determined in accordance with 7 CFR part 
1403.
    (b) A participant shall refund to NRCS all payments, plus interest, 
as determined by NRCS, with respect to all NRCS contracts to which they 
are a party if they are determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of AMA;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting an AMA determination.
    (c) Where paragraph (a) or paragraph (b) of this section apply, the 
participant's interest in all contracts shall be terminated. In 
accordance with Sec.  1465.25(c), NRCS may determine the producer 
ineligible for future funding from any NRCS conservation programs.


Sec.  1465.36  Environmental Services Credits for Conservation 
Improvements.

    USDA recognizes that environmental benefits will be achieved by 
implementing conservation practices funded through AMA, and that 
environmental credits may be gained as a result of implementing 
activities compatible with the purposes of an AMA contract. NRCS 
asserts no direct or indirect interest on these credits. However, NRCS 
retains the authority to ensure that the requirements for AMA funded 
improvements are met and maintained consistent with Sec.  1465.22. 
Where activities required under an environmental credit agreement may 
affect land covered under an AMA contract, participants are highly 
encouraged to request a compatibility assessment from NRCS prior to 
entering into such agreements.

    Dated: November 12, 2008.
Arlen L. Lancaster,
Vice President, Commodity Credit Corporation and Chief, Natural 
Resources Conservation Service.
[FR Doc. E8-27398 Filed 11-19-08; 8:45 am]
BILLING CODE 3410-05-P