[Federal Register Volume 81, Number 47 (Thursday, March 10, 2016)]
[Rules and Regulations]
[Pages 12573-12583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-05419]



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  Federal Register / Vol. 81, No. 47 / Thursday, March 10, 2016 / Rules 
and Regulations  

[[Page 12573]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1470

[Docket No. NRCS-2014-0008]
RIN 0578-AA63


Conservation Stewardship Program

AGENCY: Natural Resources Conservation Service (NRCS) and the Commodity 
Credit Corporation (CCC), United States Department of Agriculture 
(USDA).

ACTION: Final rule.

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SUMMARY: NRCS published an interim rule, with request for comments, on 
November 5, 2014, to implement changes to the Conservation Stewardship 
Program (CSP) that were either necessitated by enactment of the 
Agricultural Act of 2014 (2014 Act) or required to implement 
administrative streamlining improvements and clarifications. NRCS 
received 483 comments from 227 respondents to the interim rule. In this 
document, NRCS issues a final rule to make permanent those changes, 
respond to comments, and to make further adjustments in response to 
some of the comments received.

DATES: Effective date: This rule is effective March 10, 2016.

FOR FURTHER INFORMATION CONTACT: Mark Rose, Director, Financial 
Assistance Programs Division, U.S. Department of Agriculture, Natural 
Resources Conservation Service, Post Office Box 2890, Washington, DC 
20013-2890; telephone: (202) 720-1845; fax: (202) 720-4265.

SUPPLEMENTARY INFORMATION: 

Background

    The Food, Conservation, and Energy Act of 2008 (2008 Act) amended 
the Food Security Act of 1985 (1985 Act) to establish CSP and authorize 
the program from fiscal year 2009 through fiscal year 2012. CSP 
replaced the Conservation Security Program. The program was extended 
through fiscal year 2014 by the Consolidated and Further Continuing 
Appropriations Act, 2012. The 2014 Act revised CSP and reauthorized it 
through fiscal year 2018.
    The purpose of CSP is to encourage producers to address priority 
resource concerns and improve their conservation performance by 
installing and adopting additional conservation activities and 
improving, maintaining, and managing existing conservation activities 
on eligible land. The Secretary of Agriculture delegated authority 
through the Under Secretary for Natural Resources and the Environment 
to the NRCS Chief to administer CSP.
    Through CSP, NRCS provides financial and technical assistance to 
eligible producers to conserve and enhance soil, water, air, and 
related natural resources on their land. Eligible lands include private 
or Tribal cropland, grassland, pastureland, rangeland, nonindustrial 
private forest lands, and other land in agricultural areas (including 
cropped woodland, marshes, agricultural land, or land capable of being 
used for the production of livestock) on which resource concerns 
related to agricultural production could be addressed. Participation in 
the program is voluntary.
    CSP encourages land stewards to improve their conservation 
performance by installing and adopting additional activities and 
improving, maintaining, and managing existing activities on eligible 
land. NRCS makes funding for CSP available nationwide on a continuous 
application basis.
    On November 5, 2014, NRCS published an interim final rule with 
request for comments in the Federal Register (79 FR 65835) that amended 
CSP regulations at 7 CFR part 1470 to implement changes made by the 
2014 Act. The statutory changes made to CSP regulations by the interim 
rule included:
     Limiting eligible land to that in production for at least 
4 of the 6 years preceding February 7, 2014, the date of enactment of 
the 2014 Act.
     Requiring contract offers to meet stewardship threshold 
for at least two priority resource concerns, as defined in Sec.  
1470.3, and meet or exceed one additional priority resource concern by 
the end of the stewardship contract.
     Allowing enrollment of lands that are protected by an 
agricultural land easement under the newly-authorized Agricultural 
Conservation Easement Program (ACEP).
     Allowing enrollment of lands that are in the last year of 
the Conservation Reserve Program (CRP).
     Allowing contracts to be renewed if the threshold for two 
additional priority resource concerns will be met or the stewardship 
threshold will be exceeded for two existing priority resource concerns.
     Requiring that at least five priority resource concerns be 
identified for each area or watershed.
     Requiring NRCS to establish a science-based stewardship 
threshold for each priority resource concern.
     Authorizing NRCS to prorate conservation performance so 
that a participant may receive equal annual payments to the greatest 
extent practicable.
     Emphasizing conservation activities to be implemented 
across the agricultural operation.
     Authorizing supplemental payment for improving a resource 
conserving crop rotation.
     Authorizing an annual enrollment of 10,000,000 acres, 
rather than an enrollment of 12,769,000 acres as was authorized by the 
2008 Act.
     Establishing CSP as a covered program authorized to 
accomplish the purposes of Regional Conservation Partnership Program.
     Removing the acreage cap for non-industrial private 
forestland (NIPF).
     Authorizing veteran preference.
    NRCS also made programmatic changes including the following:
     Clarifying how CSP contract limits are applied when there 
is a change of the legal framework for an agricultural operation. 
Contract limitations applied at the time of enrollment will not change, 
regardless of successor-in-interest. This is not a change in policy, 
but is a change in how the policy is implemented starting with 
contracts obligated in 2014.
     Establishing a maximum number of applicable priority 
resource concerns (APRC) selected by the State. The maximum number of 
APRC must equal the minimum requirements from the 2014 Act. States will 
select five APRC for a geographic area.

[[Page 12574]]

     Prioritizing applications from eligible veterans competing 
in beginning farmer or rancher, or socially disadvantaged farmer or 
rancher funding pools. Eligible veteran applications in these pools 
will be set to high priority and funded first.
     Clarifying applicant eligibility requirements to ensure 
all applicants in a contract application meet all eligibility 
requirements.
    In addition to making the statutory and programmatic changes 
described above, NRCS made internal policy adjustments to improve the 
management and implementation of CSP. These policy changes included:
     Removing the requirement for State Conservationists to 
obtain concurrence at the national level to approve contract 
modifications greater than $5,000. The State Conservationist may 
approve legitimate contract increases to implement an appeal 
determination or correct an error.
     Re-delegating the requirement for State Conservationists 
to obtain an annual payment limitation waiver when a payment was not 
made in the year it was scheduled for reasons beyond participant 
control. The waiver was previously approved by the Chief and is now 
delegated to the Deputy Chief for Programs.
     Integrating Landscape Conservation Initiatives in CSP. A 
pilot is being conducted in sign-up 2015-1 to target conservation 
objectives that have regional or national significance at the landscape 
scale. The pilot includes the Sage Grouse Initiative, Lesser Prairie 
Chicken Initiative, Ogallala Aquifer Initiative, and Longleaf Pine 
Initiative.
     Requiring reporting for conservation activities and 
incorporating reporting requirements into the State Conservationist's 
performance plan to encourage a more uniform distribution of funds and 
acres across the country. This also helps with the collection of 
implementation data of activities applied on the landscape.
     Incorporating interim guidance provided via the internal 
NRCS directives system, including renewal guidance and memorandum to 
clarify the process for evaluating operational changes to determine if 
they conform to renewal eligibility provisions. Specifically, for land 
in a renewal offer to be eligible, participants are required to 
continue implementing their demonstrated and documented management 
system, including prior or comparable conservation activities from the 
initial contracts.
    NRCS originally solicited comments on the interim final rule for 60 
days ending January 5, 2015. Due to the comment period occurring 
through the end of the calendar year, NRCS extended the comment period 
until January 20, 2015. NRCS received 227 timely submitted responses to 
the rule, constituting 483 comments. The topics that generated the 
greatest response were on contract limits, payments, and ranking. 
Overall, the commenters supported the changes made by the interim rule. 
This final rule responds to the comments received by the public comment 
deadline and makes one programmatic change based upon such comments. 
Specifically, NRCS is changing the minimum contract payment available 
under Sec.  1470.24(c).

Summary of CSP Comments

    In this preamble, the comments have been organized in alphabetic 
order by topic. The topics include administration, agricultural 
operation, allocation of funds, beginning farmers and ranchers, 
conservation activities, conservation compliance, the conservation 
management tool (CMT), CRP expiring contracts, contract limits, 
cropland conversion, eligibility, enhancement and enhancement options, 
environmental credits, fairness, modifications, outreach, payments, 
producers, ranking, renewals, State Technical Committees, and 
stewardship thresholds. Additionally, NRCS received 25 comments that 
were general in nature. These comments were not addressed as they were 
outside the scope of the changes that NRCS made in the interim rule. 
Most of these general comments expressed support for the program or how 
the program has benefitted particular operations. NRCS also received 
five comments which criticized the program as wasteful government 
spending or expressed that CSP funding should be redirected to other 
conservation efforts.

Administration

    Comment: NRCS received ten comments that made recommendations 
related to the overall administration of the program. These comments 
included concerns that CSP participants may be held to a rigid 
requirement to decide what exactly will be planted on each field for 
the next 5 years, and that there are several factors that influence 
what farmers will grow, including commodity prices and yield data. To 
address this concern, some respondents recommended reducing CSP 
contracts from 5 years to 3 years.
    NRCS Response: By statute, CSP contracts are for a duration of 5 
years, and participants are required to maintain and improve the level 
of stewardship on their agricultural operations over the term of the 
contract. However, NRCS has incorporated more flexibility into program 
implementation by allowing land use conversions, changes in rotations, 
and substitution of enhancements where such substitution will result in 
the same or greater stewardship of the enrolled land. Therefore, while 
NRCS documents current management activities on the agricultural 
operation at the time of enrollment, the participant has flexibility to 
make adjustments to their management system while remaining in 
compliance with their CSP contract. The respondents' recommendations 
did not affect any of the regulatory provisions and therefore no 
changes were made.

Agricultural Operation

    Comment: NRCS received one comment requesting that NRCS apply the 
``substantially separate provision'' more consistently.
    NRCS Response: NRCS defined ``agricultural operation'' in the CSP 
interim rule, consistent with statutory parameters, as all eligible 
land, as determined by NRCS, whether contiguous or noncontiguous that 
is ``[u]nder the effective control of a producer at the time of 
enrollment in the program; and [o]perated by the producer with 
equipment, labor, management, and production or cultivation practices 
that are substantially separate (emphasis added) from other 
agricultural operations.'' NRCS applies a ``majority test'' to 
determine whether an applicant operation is substantially separate. In 
particular, if three of the following four factors are different 
between the operations, then the operation is considered 
``substantially separate'': Labor, equipment, management, and 
productive or cultivation practices. NRCS describes each of these 
factors, including providing several examples, in its manual \1\ to 
help guide NRCS field employees when assisting applicants to complete 
the agricultural operation delineation. NRCS will continue to provide 
training and quality assurance reviews to ensure that the substantially 
separate operation determinations are made consistently. No changes 
were made to the CSP regulation in response to this recommendation.
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    \1\ The CSP Manual, 440 Conservation Programs Manual Part 508, 
can be accessed at http://directives.sc.egov.usda.gov/.
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Allocation of Funds

    Comment: NRCS received eight comments concerning the allocation of 
funds under the program. One respondent recommended that CSP

[[Page 12575]]

funds be allocated to purchase rental conservation equipment to be 
managed by the local USDA Service Center for use by small farmers. NRCS 
also received several comments that, since NIPF acres are ecologically 
vital, these lands should not be subject to disproportionate cuts if 
payment cuts are required.
    NRCS Response: NRCS' authority under CSP is to provide technical 
and financial assistance to program participants to maintain existing 
conservation activities and to adopt new conservation activities to 
address priority resource concerns. NRCS does not have authority under 
CSP to purchase equipment for use by non-Federal personnel, or to rent 
such equipment to others. NRCS recognizes the environmental benefits of 
forestry lands and will not subject NIPF to disproportionate cuts if 
payment cuts that are within the control of NRCS are required due to 
the availability of funds. No changes were made to the CSP regulation 
in response to these comments.

Beginning Farmers and Ranchers

    Comment: NRCS received 53 comments requesting that NRCS increase 
the acreage goal for beginning farmers and ranchers allocated to the 
program. Most recommended that the goal be increased from 5 percent to 
15 percent.
    NRCS Response: Since 2009, the Chief has been instructed by statute 
at section 1241(h) of the 1985 Act to use, to the maximum extent 
practicable, 5 percent of total CSP acreage for socially disadvantaged 
farmers and ranchers and 5 percent of total CSP acreage for beginning 
farmers and ranchers. Section 2604 of the 2014 Act extended the special 
set asides to fiscal year 2018. The CSP regulation incorporated these 
statutory requirements at 7 CFR 1470.4(c) and 1470.20(f)(3). The 
regulation provides the Chief flexibility to determine whether to raise 
the acreage goals beyond the 5 percent. NRCS will consider these 
comments and historic participation data when determining acreage goal 
levels for each signup period.
    NRCS analyzed program enrollment data from fiscal year 2010 to 
fiscal year 2013 to determine if enrolled acres with beginning farmers 
and ranchers or socially disadvantaged farmers and ranchers exceeded 
the 5 percent nationally, and whether NRCS should consider allocating 
more acres to these two groups. The analysis revealed that setting 
aside 5 percent of the acres for designated pools for beginning farmers 
and ranchers, and socially disadvantaged farmers and ranchers is not 
limiting participation of these groups. Participation by these groups 
exceeded the 5 percent minimum. Although applicants that qualify under 
these groups compete separately in designated ranking pools within each 
geographic area of the State, they can submit their applications in the 
general ranking pools. Five hundred forty of the 4,151 contracts for 
beginning farmers and ranchers and 123 of the 1,338 contracts for 
socially disadvantaged farmers and ranchers were evaluated in the 
general ranking pools. Overall, these contracts comprise 12.2 percent 
of contracts from all sign-ups, even though they did not all compete in 
the designated pools.
    While the statute establishes a minimum set-aside of acres for 
beginning farmers and ranchers and for socially disadvantaged farmers 
and ranchers, NRCS believes that its outreach efforts can expand the 
participation by these two groups of producers beyond current 
participation rates. Therefore, NRCS is establishing a policy goal to 
expand enrollment by beginning farmers and ranchers and socially 
disadvantaged farmers and ranchers in all ranking pools, and will also 
allocate additional acres to the two set-aside ranking pools as needed 
to address program demand amongst these producers.
    No changes were made to the CSP regulation in response to this 
recommendation.

Conservation Activities

    Comment: NRCS received seven comments related to the topic of 
conservation activities. These comments included recommendations that 
energy audits qualify as an enhancement, NRCS staff receive additional 
training on the issue of soil health, wildlife enhancements address 
predation pressures, enhancements to expand native prairie grass be 
promoted, and that NRCS only fund conservation activities that are 
shown to have an environmental benefit. NRCS also received a comment 
expressing concern that enhancement bundles provide an unfair advantage 
to larger operations because larger operations have greater ability to 
adopt entire bundles; therefore, such bundles should not receive 
priority consideration for funding.
    NRCS Response: NRCS considers internal and external customers' 
recommendations regarding new or modified enhancements that may be 
needed to address priority resource concerns at the local level through 
local work groups and at the State level through State Technical 
Committees. NRCS State Conservationists seek input on these 
recommendations from the State Technical Committee members and other 
program stakeholders. While the recommendations above do not affect any 
of the regulatory provisions, NRCS will consider these recommendations 
when evaluating new enhancements that will be offered in future 
signups. As to the comment about enhancement bundles, NRCS believes it 
is appropriate to provide greater priority for the adoption of 
enhancement bundles due to the greater environmental benefit created 
when enhancements are implemented together. NRCS will review the 
available enhancement bundles to ensure that there are sufficient 
options applicable to smaller operations. No changes to the CSP 
regulation were made in response to these comments.

Conservation Compliance

    Comment: NRCS received two comments related to the requirement that 
CSP participants must comply with the highly erodible land conservation 
and wetland conservation provisions at 7 CFR part 12, referred to in 
the comments as ``cross-compliance.'' These respondents expressed 
concern that cross compliance has not been enforced, creating concerns 
with visible erosion and waterways that are not functioning as 
intended.
    NRCS Response: CSP, like other Title XII conservation programs, is 
subject to the conservation compliance requirements under 7 CFR part 
12. NRCS verifies conservation compliance before awarding a contract as 
part of the minimum program requirements and during the contract term 
through mandatory annual contract reviews, 5 percent spot checks, and 
10 percent random reviews which requires field visits for compliance 
purposes. NRCS will continue to provide training to ensure proper 
contract management and implementation is exercised at all times. No 
changes to the CSP regulation were made in response to these comments.

CMT

    Comment: NRCS received four comments related to CMT. Three 
respondents recommended the continued use of CMT, but suggest making it 
more transparent and accessible, including having a version of CMT 
available to producers to run alternative scenarios for themselves 
prior to applying for program benefits. The other respondent identified 
that the performance values used in CMT to determine payments do not 
translate to adequate compensation for expenses to

[[Page 12576]]

implement additional activities, and thus the valuation process 
utilizing CMT is not preferred.
    NRCS Response: The 2014 Act removed reference to CMT in the CSP 
statute. While the removal of references to CMT does not preclude 
utilizing CMT in CSP implementation, NRCS now has the flexibility to 
explore other methods for evaluating CSP applications for funding. NRCS 
has convened a team to explore other, more transparent, methods for 
making eligibility, ranking, and payment determinations that do not 
rely solely, or at all, upon the use of CMT. Since NRCS removed 
references to the CMT in the CSP interim rule, no changes are needed to 
CSP regulations in response to these comments.

CRP Expiring Contracts

    Comment: NRCS received two comments related to expiring CRP 
contracts. These comments recommend that NRCS increase coordination 
with the Farm Service Agency (FSA) to ensure a seamless transition from 
CRP back to agricultural production, including the adoption of policies 
that encourage retaining the conservation cover that had been 
established under CRP.
    NRCS Response: NRCS welcomes the recommendation and will continue 
coordinating with FSA to improve the transition process within 
authority. NRCS has amended the regulation to allow transitioning land 
to participate in CSP as authorized in the 2014 Act, and has 
established a seamless process to transition from CRP back to 
agricultural production. Presently, NRCS offers four enhancements 
designed to preserve the benefits gained while in CRP or mitigate 
negative effects from transitioning expired CRP lands to production 
agriculture. These enhancements are:
     Animal Enhancement Activity (ANM35): Enhance wildlife 
habitat on expired grass/legume-covered CRP acres or acres with similar 
perennial vegetated cover managed as hayland.
     Animal Enhancement Activity (ANM36): Enhance wildlife 
habitat on expired tree-covered CRP acres or acres with similar woody 
cover managed as forestland.
     Animal Enhancement Activity (ANM37): Prescriptive grazing 
management system for grazed lands (includes expired CRP grass/legume- 
or tree-covered acres converted to grazed lands).
     Soil Quality Enhancement Activity (SQL10): Crop management 
system where crop land acres were recently converted from CRP grass/
legume cover or similar perennial vegetation.
    Detailed descriptions of these enhancement activities can be found 
at the agency program Web site. \2\ NRCS will continue evaluating new 
technology that can be offered in the future to help producers 
transition back to agricultural production in a sustainable manner. 
Changes are not needed to the CSP regulation in response to these 
comments.
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    \2\ http://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/programs/financial/csp/?cid=stelprdb1265825.
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Contract Limit

    Comment: NRCS received 103 comments recommending that NRCS 
eliminate the higher contract limit that is available to joint 
operations. Two other comments recommended that NRCS retain the higher 
contract limit.
    NRCS Response: Since 2010, NRCS identified in the CSP regulation a 
contract limitation of $200,000 per person or legal entity, and 
$400,000 for joint operations. The original CSP statute required that 
``A person or legal entity may not receive, directly or indirectly, 
payments that, in the aggregate, exceed $200,000 for all contracts 
entered into during any 5-year period.'' There is no statutory mention 
of a contract limit.
    Payment limitations do not apply directly to ``joint operations'' 
(the term joint operation includes general partnerships and joint 
ventures). Rather, each member of a joint operation is treated as a 
separate person or legal entity with payments directly attributed to 
them. With no contract limit or direct attribution, contracts with 
joint operations could be very large (for example, $1 million contracts 
for joint operations with five members that received the $200,000 
maximum).
    To address these concerns under the original statute, NRCS imposed 
a regulatory contract limit that corresponded with the program payment 
limitation of $200,000, and later established a higher contract limit 
for joint operations. This resulted in unintended consequences as it 
encouraged applicants and participants to restructure their operations 
to qualify for the higher contract limit.
    The 2014 Act did not address NRCS regulatory contract limits and 
NRCS kept the higher contract limit for joint operations in the CSP 
interim rule, but prohibited any increase in contract obligation due to 
producers restructuring their operation and transferring the contracts 
to joint operations eligible for the higher contract limit during the 
contract term. NRCS did not receive any comments on this prohibition 
and maintains such prohibition in this final rule.
    However, on the issue of eliminating the higher contract level 
itself, NRCS does not believe it is appropriate to make such a change 
in this final rule since NRCS did not identify in the interim rule that 
it might reconsider whether or not to keep the higher contract limit 
for joint operations. Therefore, NRCS is maintaining the $400,000 
contract limit for joint operations. NRCS is considering requesting 
additional public input on this specific topic though a separate 
Federal Register notice at a later date.

Cropland Conversion

    Comment: NRCS received one comment that expressed uncertainty about 
whether the prohibition on making payment for land converted to 
cropland applied to forestland.
    NRCS Response: Section 1238E(b)(2) of the CSP statute specifies 
that eligible land used for crop production after February 7, 2014, 
(the date of enactment of the 2014 Act), that had not been planted, 
considered to be planted, or devoted to crop production for at least 4 
of the 6 years preceding that date, shall not be the basis for any 
payment under CSP unless certain exceptions apply. This prohibition 
applies to all eligible land under the program, including non-
industrial private forest land. Therefore, non-industrial forest land 
that was not in crop production for at least 4 of the 6 years preceding 
February 7, 2014, is not eligible for CSP payment if it is subsequently 
converted to cropland. No changes were made to the regulation in 
response to this comment.

Eligibility

    Comment: NRCS received 19 comments that recommended that NRCS 
incorporate flexibility into the requirement that an entire farm be 
enrolled under a CSP contract.
    NRCS Response: Section 1238F(a) of the CSP statute specifies that 
to be eligible to participate in CSP, a producer shall submit to the 
Secretary a contract offer for the agricultural operation. As described 
above, NRCS applies a majority test to determine the scope of an 
applicant's agricultural operations and whether it is substantially 
separate from other operations of the applicant. NRCS believes that 
this test provides a credible, flexible means by which agricultural 
operations are identified and enrolled within statutory requirements. 
No changes to the CSP regulation were made in response to these 
comments.

[[Page 12577]]

Enhancements and Enhancement Options

    Comment: NRCS received 17 comments related to enhancements and 
enhancement options. Among these comments were recommendations that 
there be more enhancements specific to organic production for certified 
organic producers, that enhancement options address measurable 
sustainable practices, and increase the availability of enhancements 
that will restore grasslands back to native prairie conditions. The 
comments related to the native grass enhancements asserted that this 
recommendation would provide a mechanism for better wildlife management 
for hunting and recreational use, and thus stimulate rural economies in 
small towns.
    NRCS Response: NRCS will consider these recommendations in its 
identification and adoption of enhancements for future signups. 
Consistent with program purpose, future enhancements will meet or 
exceed the quality criteria for resource concerns. These comments do 
not relate directly to the regulations, and therefore no changes were 
made to the CSP regulations in response to these comments.

Environmental Credits

    Comment: NRCS received two comments related to environmental 
credits. One respondent recommends that there be a program that 
compensates for carbon sequestration and another requests that access 
to environmental credit trading opportunities be made available to CSP 
participants.
    NRCS Response: NRCS identifies in Sec.  1470.37 of the CSP 
regulations that CSP participants may achieve environmental benefits 
that qualify for environmental credits under an environmental credit-
trading program. However, a CSP participant who enters into such a 
credit-trading program must ensure that any activities under that 
trading program are consistent with their responsibilities under the 
CSP contract. While CSP does not make payments directly for carbon 
sequestration, many of the conservation activities for which payment is 
made do assist with carbon sequestration efforts. For example, high 
residue cover crops or mixtures of high residue cover crops for weed 
suppression and soil health, or prairie restoration for grazing and 
wildlife habitat, both provide carbon building opportunities. No 
changes were made to the CSP regulation in response to these comments.

Fairness

    Comment: NRCS received six comments recommending all farmers be 
treated equally, and for NRCS to keep the small and medium-sized 
agricultural entities at the forefront of NRCS plans.
    NRCS Response: NRCS reviews each of its policies in light of how 
such policy may affect small and medium-sized agricultural operations, 
and removes, wherever possible, any barriers to full participation. 
NRCS is also exploring other ways to increase participation of 
producers with small operations, including expanding the minimum 
payment to all producers and potentially designating ranking pools for 
small operations to accommodate competitions of applicants that have 
similar challenges, such as limited resources to implement new 
activities. These efforts being evaluated are expected to increase 
participation of small operations and treat all producers fairly. NRCS 
considered these comments about fairness when reviewing how to address 
all the other topics raised by the public comments.

Modifications

    Comment: NRCS received two comments recommending that participants 
be allowed to add qualifying land to an existing CSP contract during 
the CSP contract term, and three other comments recommending that 
participants be allowed to remove land from a CSP contract and that 
NRCS adopt more flexibility to allow participants to make changes to 
the resource inventory for their agricultural operation without 
penalty.
    NRCS Response: NRCS recognizes that some of its flexibility in 
managing CSP contracts was limited by the business tools available. As 
identified above, NRCS has convened a team to review the business 
processes and methods used to implement CSP, including methods that may 
facilitate greater flexibility in allowing participants to make 
appropriate modifications to their CSP contracts. No changes were made 
to the CSP regulation in response to these comments.
    The CSP contract modification and transfer provision encompasses 
circumstances where a participant is considered in violation of their 
CSP contract for losing control of the land under contract for any 
reason. NRCS may allow a participant to transfer the CSP contract 
rights to an eligible producer provided: (1) The participant notifies 
NRCS of the loss of control within the time specified in the contract; 
(2) NRCS determines that the new producer is eligible to participate in 
the program; and (3) the transfer of the contract rights does not 
interfere with meeting program objectives.
    Given that the new producer is not a party to the CSP contract 
until NRCS approves the contract transfer and adds the new producer to 
the contract, a new producer may not be aware they are not eligible for 
payment until the contract transfer has been approved by NRCS. In 
particular, any activities that a new producer implements prior to NRCS 
approval of the contract transfer is not eligible for payment because 
they are not a program participant at the time of implementation. NRCS 
is taking this opportunity to clarify the provisions at 7 CFR 1470.25, 
including: (1) A participant's responsibility to notify NRCS about any 
loss of control of land; (2) the timing of when a new producer must be 
identified; (3) the timing of when a new producer becomes eligible for 
payment; and (4) the circumstances when partial or full termination of 
the contract may be appropriate. This change does not affect the 
substance of NRCS regulatory and policy framework regarding land 
transfers.

Outreach

    Comment: NRCS received two comments related to the topic of 
outreach, including recommendations that NRCS explore more options to 
attract more organic producers to CSP.
    NRCS Response: In prior years, NRCS has offered enhancements that 
specifically address organic production and transitioning to organic 
production. Additionally, NRCS has offered conservation activities 
which have a high likelihood of adoption by organic producers or those 
who are interested in transitioning to organic production. NRCS is 
currently exploring opportunities to simplify CSP implementation, and 
is going to tie its enhancement offerings more closely with NRCS 
conservation practices. Through the new process, NRCS anticipates 
offering expanded opportunities for participation by organic 
productions and those transitioning to organic production, such as 
offering enhancement bundles specifically targeted to these producers. 
Enhancement bundles are a suite of enhancements that provide greater 
environmental benefits when implemented in conjunction with one 
another.

Payments

    Comment: NRCS received 114 comments related to payments under CSP, 
nearly all of which expressed

[[Page 12578]]

concern about two primary issues: The $1,000 minimum annual payment to 
historically underserved producers and the basis upon which payments 
are calculated. The commenters nearly uniformly requested that the 
minimum annual payment be increased to $1,500 for all CSP participants. 
In regard to the second issue, commenters were split in their 
recommendations. Many of the commenters recommended that CSP place more 
emphasis upon paying for existing conservation activities rather than 
for adopting new conservation activities, while other commenters 
recommended that CSP payments be limited to new conservation 
activities.
    NRCS Response: Currently, Sec.  1470.24(c) identifies that NRCS 
will make a minimum contract payment to historically underserved 
participants at a rate determined by the Chief in any fiscal year that 
a contract's payment amount total is less than $1,000. Thus, currently, 
the minimum payment amount is only available to limited resource 
farmers, beginning farmers and ranchers, and socially disadvantaged 
farmers and ranchers. NRCS examined several scenarios and the impact 
that the adoption of different policies would have on program 
expenditures, and decided to adopt, for fiscal year 2016, a minimum 
contract payment of $1,500 for any participant whose annual contract 
amount is less than $1,500. The Chief may modify this minimum contract 
payment in future years based upon the effort required of a participant 
to comply with contract requirements. Therefore, Sec.  1470.24(c) in 
this final rule has been modified accordingly.
    As for payment split calculations, the balance between how much 
emphasis is placed on existing conservation activities versus new 
conservation activities has been repeatedly raised and addressed in 
program implementation. CSP program participants are eligible to 
receive annual payments for existing conservation levels and to 
implement additional conservation activities. The costs associated with 
maintaining existing conservation levels are often less than the costs 
associated with implementing additional conservation activities, 
resulting in additional conservation activities contributing more to 
the annual payment rate. NRCS believes maintaining the current payment 
process in favor of additional activities ensures that the program 
emphasis meets statutory intent and that stewardship levels improve 
over the term of the contract. Further, this payment structure provides 
the appropriate encouragement to ensure such improvement. No changes 
were made to the regulation in response to these comments.

Producers

    Comment: NRCS received one comment recommending that participants 
be ``actively engaged'' in the agricultural operation.
    NRCS Response: NRCS concurs with the respondent's recommendation 
and had incorporated this requirement in the CSP interim rule at 7 CFR 
1470.6(a)(1). Since such requirement already exists, no further changes 
have been made to the CSP regulation in response to this comment.

Ranking

    Comment: NRCS received 47 comments on the topic of ranking, most of 
which recommended that existing activities be given either equal or 
greater priority in ranking applications, while a couple of comments 
recommended that new activities be given priority in ranking. Some of 
the commenters recommended that ranking be based on environmental 
benefits and outcomes.
    NRCS Response: In Sec.  1470.20(d) of the CSP interim rule and 
related discussion in the preamble, NRCS identified that it would 
maintain weightings of ranking factors that continue to emphasize 
greatly the extent to which additional activities will be adopted. The 
ranking provisions in the CSP statute favor additional activities over 
existing activities. NRCS gives equal weight to each of the statutory 
factors, resulting in greater emphasis upon new activities. NRCS 
believes maintaining the current ranking process in favor of additional 
activities ensures that the program emphasis meets CSP's statutory 
intent. No changes were made to the regulation in response to these 
comments.

Renewals

    Comment: NRCS received four comments related to contract renewal, 
including: Disagreement with the requirement to maintain the documented 
system when renewing, concern that additional activities become 
existing activities under renewal and are thus unavailable to be 
planned again, concern that it appears payments for renewed grazing 
operations is half of the original contract but the same does not 
appear to be true for cropland operations, and a recommendation that 
producers should be able to drop irrelevant practices at the time of 
renewal.
    NRCS Response: NRCS incorporated the statutory requirements for 
contract renewal in Sec.  1470.26 of the CSP interim rule. The purpose 
of the requirement to maintain the documented system when renewing is 
to ensure that the producer is ``in compliance with the terms of their 
initial contract as determined by NRCS'' (7 CFR 1470.26(b)(1)). No 
changes were made to the regulation in response to this comment; 
however, NRCS is reviewing its business methods, and is exploring ways 
to facilitate the substitution of conservation activities between the 
initial contract and the renewal contract where appropriate.
    The difference in payment rates between the initial contract and a 
renewal contract results from the different activities that will be 
implemented during the renewal contract. In particular, once a 
participant has adopted a conservation activity under the original 
contract, the participant only incurs maintenance costs associated with 
that conservation activity under a renewal contract related to the 
costs. The costs of maintenance for most conservation activities are 
lower than the costs incurred during initial implementation, thus 
resulting in a lower payment rate for the renewal contract unless the 
participant adopts new conservation activities. Due to the changes in 
the availability of certain activities and enhancements, these payment 
disparities seem to be more pronounced for contract renewals associated 
with the first, 2010-2011, signup, and NRCS analysis reveals that 
higher payments will be available for future renewal signup.

State Technical Committees

    Comment: NRCS received one comment related to the topic of State 
Technical Committees, recommending that the process by which these 
committees provide input to identify a priority resource concern should 
be more transparent.
    NRCS Response: NRCS has published a regulation (at 7 CFR part 610, 
subpart C) and standard operating procedures (e.g., 74 FR 66907) for 
how it seeks input from the State Technical Committees and how the 
public can be aware of their activities. In particular, pursuant to 7 
CFR 610.23, State Conservationists must provide public notice and allow 
the public to attend State Technical Committee and Local Working Group 
meetings. The meeting notice must be published at least 14 calendar 
days prior to a State Technical Committee meeting, unless State open 
meeting laws exist and provide for a longer notification period. NRCS 
believes that how it conducts its meetings provides transparency 
regarding State Technical Committee input with respect to all of its 
conservation programs, including

[[Page 12579]]

identification of priority resource concerns for CSP implementation. No 
changes were made to the CSP regulations in response to this comment.

Stewardship Thresholds

    Comment: NRCS received 46 comments that the stewardship thresholds 
should be set at a sustainable level.
    NRCS Response: NRCS currently incorporates sustainability in the 
established thresholds based upon information within the NRCS Technical 
Guides, which establish standards for resource conditions that help 
provide sustained use of natural resources. NRCS will continue 
evaluating stewardship thresholds after each signup to ensure the 
program purpose continues to be met as signups progress and the pool of 
applicants change. No changes were made to the CSP regulation in 
response to these comments.

Regulatory Changes

    As identified above, in response to public comments, NRCS is 
changing the minimum contract payment available under Sec.  1470.24(c).
    In addition to these changes, NRCS is also making a change with 
respect to a contract requirement under Sec.  1470.24(a) and (b). In 
particular, paragraph (a) requires that at least one additional 
conservation activity must be scheduled, installed, and adopted in the 
first fiscal year of the contract, and all enhancements must be 
scheduled, installed, and adopted by the end of the third fiscal year 
of the contract. Paragraph (b)(2) requires that a resource-conserving 
crop rotation must be planted on at least one-third of the rotation 
acres by the third fiscal year of the contract.
    These requirements arose under the original program to ensure that 
there was sufficient justification of costs for NRCS to make payment in 
the first year of enrollment and that participants implement 
enhancements and crop rotations as soon as possible in the term of the 
contract. NRCS is modifying the provision to be consistent with the 
Environmental Quality Incentives Program found in 7 CFR part 1466 where 
practices have to be installed within the first 12 months after 
contract approval versus tying it to a Federal fiscal year. Tying 
conservation activity implementation to a Federal fiscal year may 
preclude a participant from having a full year to implement a 
conservation activity. Even so, NRCS remains cognizant that CSP and 
EQIP have certain fundamental differences that require different 
approaches. One of these is that CSP, unlike EQIP, targets the best 
conservation stewards. As such, it is reasonable to expect under most 
circumstances that CSP participants will implement enhancements and 
resource-conserving crop rotations expeditiously. Thus, NRCS maintains 
the time requirement in the regulation in which enhancements and 
resource-conserving crop rotations must be implemented, but provides 
the Chief with flexibility to ensure appropriate planning for 
particular enhancements and resource-conserving crop rotations where 
conservation stewardship goals will be better met with a different 
implementation schedule.
    Therefore, NRCS is adjusting these time requirements in the 
regulation. These changes will improve implementation of CSP 
stewardship plan requirements and minimize the need for unnecessary 
late scheduling implementation waivers to allow the producer to earn 
the first payment if the contract is awarded late in the Federal fiscal 
year. Additionally, NRCS has simplified language to incorporate the 
2014 Act's removal of the required use of CMT and the flexibility 
provided to prorate annual payments over the term of the contract.

Regulatory Certifications

Executive Order 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. NRCS is currently 
conducting a focused internal review of CSP and accompanying 
regulations with the goal of providing improved customer service and, 
ultimately, improved program performance. NRCS is also exploring ways 
to emphasize priority enhancements in CSP, as well as ways to better 
understand and relay to the public the economic and environmental 
benefits of conservation implementation over time. NRCS expects the 
results of these retrospective review efforts to improve management and 
maximize the impact of the intended conservation benefits associated 
with the program.
    The Office of Management and Budget (OMB) designated this final 
rule a significant regulatory action. The administrative record is 
available for public inspection at USDA headquarters at 1400 
Independence Avenue, Southwest, South Building, Room 5247, Washington, 
DC 20250. Pursuant to Executive Order 12866, NRCS conducted a 
regulatory impact analysis of the potential impacts associated with 
this program. A summary of the analysis can be found at the end of this 
preamble, and a copy of the analysis is available upon request from the 
Director of the Financial Assistance Programs Division (see above for 
contact information), or electronically at:  http://www.nrcs.usda.gov/programs/csp/ under the CSP Rules and Notices with Supporting Documents 
title. In addition, the analysis and other supporting documents can be 
found at www.regulations.gov by accessing docket number NRCS-2014-0008.
    Executive Order 12866, as supplemented by Executive Order 13563, 
requires each agency to write all rules in plain language. In addition 
to the substantive comments NRCS received to the interim rule, NRCS 
invited public comment on how to make the provisions easier to 
understand. NRCS has incorporated these recommendations for improvement 
where appropriate. NRCS responses to public comment are described more 
fully later in this preamble.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act or any other statute. NRCS did not prepare 
a regulatory flexibility analysis for this rule because NRCS is not 
required by 5 U.S.C. 553, or any other provision of law, to publish a 
notice of proposed rulemaking with respect to the subject matter of 
this rule. Even so, NRCS has determined that this action, while mostly 
affecting small entities, will not have a significant economic impact 
on a substantial number of these small entities. NRCS made this 
determination based on the fact that this regulation only impacts those 
who choose to participate in the program. Small entity applicants will 
not be affected to a greater extent than large entity applicants.

Environmental Analysis

    NRCS has determined that changes made by this rule fall within a 
category of actions that are excluded from the

[[Page 12580]]

requirement to prepare either an Environmental Assessment (EA) or 
Environmental Impact Statement (EIS). The changes made by the rule are 
primarily those mandated by the 2014 Act, though there are additional 
administrative changes made to improve consistency with other NRCS 
programs and make other clarifications. NRCS has no discretion with 
respect to changes mandated by the 2014 Act; therefore, the National 
Environmental Policy Act (NEPA) does not apply. Administrative changes 
made in this rule fall within a categorical exclusion for policy 
development relating to routine activities and similar administrative 
functions (7 CFR 1b.3(a)(1)), and NRCS has identified no extraordinary 
circumstances that would otherwise require preparation of an EA or EIS.
    To further its site-specific compliance with NEPA, NRCS reviewed 
the 2009 CSP Programmatic EA, and found this rule makes no substantial 
changes that are relevant to environmental concerns as compared to the 
EA proposed action. Furthermore, NRCS has not found any significant new 
circumstances or information relevant to environmental concerns. As a 
result, NRCS will continue to tier to the 2009 CSP Programmatic EA as 
appropriate to meet NEPA requirements related to site-specific 
activities.

Civil Rights Impact Analysis

    NRCS has determined, through a Civil Rights Impact Analysis, that 
the final rule discloses no disproportionately adverse impacts for 
minorities, women, or persons with disabilities. The national target of 
setting aside 5 percent of CSP acres for socially disadvantaged farmers 
and ranchers, and an additional 5 percent of CSP acres for beginning 
farmers and ranchers, as well as prioritizing veterans applications 
that are competing in these subaccounts for socially disadvantaged 
farmers and ranchers, and beginning farmer and ranchers is expected to 
increase participation among these groups.
    The data presented in the analysis indicate producers who are 
members of the protected groups have participated in NRCS conservation 
programs at parity with other producers. Extrapolating from historical 
participation data, it is reasonable to conclude that CSP will continue 
to be administered in a nondiscriminatory manner. Outreach and 
communication strategies are in place to ensure all producers will be 
provided the same information to allow them to make informed decisions 
regarding the use of their lands that will affect their participation 
in USDA programs. NRCS conservation programs apply to all persons 
equally, regardless of their race, color, national origin, gender, sex, 
or disability status. Therefore, this interim rule portends no adverse 
civil rights implications for women, minorities, or persons with 
disabilities.

Paperwork Reduction Act

    Section 1246 of the 1985 Act provides that implementation of 
programs authorized by Title XII of the 1985 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 final rule.

Government Paperwork Elimination Act

    NRCS is committed to compliance with the Government Paperwork 
Elimination Act and the Freedom to E-File Act, which require 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.

Executive Order 13175

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13175, ``Consultation and Coordination 
with Indian Tribal Governments.'' Executive Order 13175 requires 
Federal agencies to consult and coordinate with Tribes on a government-
to-government basis regarding policies that have Tribal implications, 
including regulations, legislative comments or proposed legislation, 
and other policy statements or actions that have substantial direct 
effects on one or more Tribes, on the relationship between the Federal 
government and Tribes, or on the distribution of power and 
responsibilities between the Federal government and Tribes. NRCS has 
assessed the impact of this final rule on Tribes and determined that 
this rule does not have Tribal implications that require Tribal 
consultation under Executive Order 13175.
    The agency has developed an outreach and collaboration plan that it 
has been implementing as it develops its policy in regard to the 2014 
Act. If a Tribe requests consultation, NRCS will work at the 
appropriate local, State, or national level, including with the USDA 
Office of Tribal Relations, to ensure meaningful consultation is 
provided where changes, additions, and modifications identified herein 
are not expressly mandated by Congress.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, requires Federal agencies to assess the effects of their 
regulatory actions on the private sector, or State, local, and Tribal 
governments of $100 million or more in any one year. When such a 
statement is needed for a rule, section 205 of UMRA requires NRCS to 
prepare a written statement, including a cost-benefit assessment, for 
proposed and final rules with ``Federal mandates'' that may result in 
such expenditures for State, local, or Tribal governments, in the 
aggregate, or to the private sector. UMRA generally requires agencies 
to consider alternatives and adopt the more cost effective or least 
burdensome alternative that achieves the objectives of the rule.
    This rule contains no Federal mandates, as defined under Title II 
of UMRA, for the private sector, or State, local, and Tribal 
governments. Thus, this rule is not subject to the requirements of 
sections 202 or 205 of UMRA.

Executive Order 13132

    NRCS has considered this final rule in accordance with Executive 
Order 13132, issued August 4, 1999. NRCS has determined that the final 
rule conforms with the federalism principles set out in this Executive 
Order, would not impose any compliance costs on the States, and would 
not have substantial direct effects on the States, on the relationship 
between the Federal government and the States, nor on the distribution 
of power and responsibilities among the various levels of government. 
Therefore, NRCS concludes that this final rule does not have federalism 
implications.

Economic Analysis--Executive Summary

    CSP is authorized under the provisions of Chapter 2, Subtitle D of 
Title XII of the 1985 Act (16 U.S.C. 3830 et seq.), as amended by Title 
II, Subtitle D of the 2008 Act, Public Law 110-246, 122 Stat. 1651 
(2008), and by Title II, Subtitle B of the 2014 Act, Public Law 113-79 
(2014). The Secretary of Agriculture, acting through the Chief of NRCS, 
administers the program.
    As part of the 2014 Act, Congress reauthorized CSP and capped 
enrollment at 10 million acres for each fiscal year during the period 
February 7, 2014, through September 30, 2022. However, the 2014 Act 
only provided funding through fiscal year 2018. CSP contracts run for 5 
years and include the

[[Page 12581]]

potential for a one-time renewal option for an additional 5 years, thus 
creating financial obligations through fiscal year 2027 for commitments 
made during fiscal years 2014 to 2018. Nationally, program costs cannot 
exceed an annual average rate of $18 per acre. For each of the five 
fiscal year signups (2014 to 2018) including a one-time contract 
renewal option for an additional 5 years, Congress authorized a maximum 
of $1.8 billion. Total authorized funding equals $9 billion for the 
five signups.
    Participation in CSP is voluntary. Agricultural and forestry 
producers decide whether or not CSP participation helps them achieve 
their objectives. Hence, CSP participation is not expected to 
negatively impact program participants and nonparticipants.
    Pursuant to Executive Order 12866, Regulatory Planning and Review 
(Office of the President, 1993) and the Office of Management and 
Budget's Circular A-4 (Office of Information and Regulatory Affairs, 
2003) that provides guidance in conducting regulatory analyses, NRCS 
conducted an assessment of CSP consistent with its classification as a 
``significant'' program. Most of this rule's impacts consist of 
transfers from the Federal government to producers. Although these 
transfers create incentives that very likely cause changes in the way 
society uses its resources, we lack data to estimate the resulting 
social costs or benefits. This analysis therefore, includes a summary 
of program costs and qualitative assessment of program impacts.
    Total program obligations for CSP are shown in table E1. 
Obligations include only costs to the Federal government between fiscal 
year 2014 and 2027 (five signups with one-time, 5-year contract 
renewals). Projected maximum program obligations in nominal dollars 
equal $9 billion. Given a 3 percent discount rate, projected cumulative 
program obligations equal $6.405 billion in constant 2014 dollars. At a 
7 percent discount rate, maximum program obligations equal $4.942 
billion in constant 2014 dollars. Average annualized obligations at the 
3 percent and 7 percent discount rates equal $567 million and $565 
million, respectively.

                                   Table E1--Projected Maximum Program Obligations for CSP, FY 2014 Through FY 2027 a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Obligation                     Present value                   Present value
                                          Obligation \b\     GDP price       constant        Discount     of obligation--    Discount     of obligation--
               Fiscal year                  (million $)    deflator \c\       dollars     factors for 3%  3% (million $)  factors for 7%  7% (million $)
                                                            (2014=100)      (million $)
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY14....................................             180        100.0000             180          0.9709             175          0.9346             168
FY15....................................             360        102.1000             353          0.9426             332          0.8734             308
FY16....................................             540        104.2441             518          0.9151             474          0.8163             423
FY17....................................             720        106.4332             676          0.8885             601          0.7629             516
FY18....................................             900        108.6683             828          0.8626             714          0.7130             591
FY19....................................             900        110.9504             811          0.8375             679          0.6663             541
FY20....................................             900        113.0584             796          0.8131             647          0.6227             496
FY21....................................             900        115.2065             781          0.7894             617          0.5820             455
FY22....................................             900        117.3954             767          0.7664             588          0.5439             417
FY23....................................             900        119.6260             752          0.7441             560          0.5083             382
FY24....................................             720        121.8989             591          0.7224             427          0.4751             281
FY25....................................             540        124.2149             435          0.7014             305          0.4440             193
FY26....................................             360        126.5750             284          0.6810             194          0.4150             118
FY27....................................             180        128.9799             140          0.6611              92          0.3878              54
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................           9,000  ..............           7,912  ..............           6,405  ..............           4,942
                                         ---------------------------------------------------------------------------------------------------------------
    Annualized Obligations..............  ..............  ..............  ..............  ..............             567  ..............             565
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Table 1 of this document.
\b\ Congress set a maximum of 10 million acres per signup and a national payment rate of $18 per acre. With a one-time contract renewal option, each
  signup equals $1.8 billion in projected program obligations over its 10-year period. Congress authorized five signups.
\c\ For years 1 to 5, the GDP adjustment is 2.10 percent (OMB); for years 6 to 14, the GDP adjustment factor is 1.90 percent (average growth since
  1993).

    Compared to CSP as authorized under the 2008 Act, Congress reduced 
its size but left much of CSP's underlying structure intact. In 
addition, the Secretary of Agriculture proposed a number of 
discretionary changes as a means of improving program implementation.
    As shown in table E2, the downsizing of CSP from an annual 12.769-
million-acre program to an annual 10-million-acre program has the 
greatest impacts on program funds, conservation activities, and cost-
effectiveness. Program funds, which include financial and technical 
assistance, decrease by $2.492 billion (nominal dollars), compared to 
CSP under the 2008 Act. With fewer acres and fewer dollars, fewer 
contracts will be funded under the 2014 Act. The new conservation 
activities that would have been applied to enhance the existing 
activities on the lost 2.769 million acres will not be applied to the 
Nation's working lands. However, cost-effectiveness, defined as dollars 
per additional unit of conservation effect, will improve slightly 
because lower ranked eligible applications are the first ones cut from 
every State's ranking pools. That is, obligations per unit of 
conservation effect will be lower under the 2014 Act. Properly 
implemented, a smaller sized CSP will be neutral in its impacts across 
all producer types, including beginning and socially disadvantaged 
groups.

[[Page 12582]]



              Table E2--Program Impacts of the Statutory Requirements and Discretionary Actions \a\
----------------------------------------------------------------------------------------------------------------
                                    Based on 2008 CSP Farm Bill Provisions: 12.769 Million Acres vs. 10 Million
                                                                       Acres
                                 -------------------------------------------------------------------------------
            Statutory                                     Impacts of
                                     Program funds       conservation     Cost-effectiveness      Participant
                                                          activities                               diversity
----------------------------------------------------------------------------------------------------------------
Acreage Enrollment Limitation...  -$2.492 billion in  Significantly       Small improvement.  No impact.
                                   program funds.      large decrease.
----------------------------------------------------------------------------------------------------------------
                                           2008 CSP at 10 Million Acres vs. 2014 CSP at 10 Million Acres
----------------------------------------------------------------------------------------------------------------
Conditions for Contract Renewal.  Small/Moderate      Increase..........  Small Improvement.  No Impact.
                                   decrease.
----------------------------------------------------------------------------------------------------------------
Discretionary                        Program funds        Impacts of      Cost-effectiveness      Participant
                                                          conservation                             diversity
                                                           activities
----------------------------------------------------------------------------------------------------------------
Contract Renewal: To renew        Moderate decrease.  Marginal Increase.  Marginal            No Impact.
 contracts, shift eligibility                                              Improvement.
 determinations to applicable
 priority resource concerns.
Annual minimum contract payment   +; Negligible.....  No Impact.........  -; Negligible.....  No Impact.
 (increase to $1,500; all
 participants).
----------------------------------------------------------------------------------------------------------------
\a\ Shortened version of table 9 and table 11 in the main document.

    One additional legislated change in the 2014 Act, additional 
contract renewal requirements, is also expected to generate smaller, 
yet important program impacts. The legislated 2014 contract renewal 
requirements--producer agrees to meet the stewardship thresholds for at 
least two additional priority resource concerns by the end of the 
renewed contract period or to exceed the stewardship thresholds of at 
least two existing priority resource concerns specified in the original 
contract--will likely result in a slightly larger portion of CSP 
participants not renewing their contracts compared to a comparably 
sized 2008 CSP and renewal rate. The 2008 Act only requires the 
addition of one or more new conservation activities for contract 
renewal. However, CSP participants under the 2014 Act are required to 
add activities to meet or exceed stewardship thresholds for at least 
two priority resource concerns, thus likely increasing the number of 
additional activities applied in the second 5-year period. With yearly 
payments extended and more activities being applied under 2014 Act 
renewals, a slight improvement in cost-effectiveness is expected. 
Overall no differential impacts are expected between general 
agricultural and forest producers, and beginning and socially 
disadvantaged producers, including veteran status.
    An important discretionary change is clearly defining the terms 
``applicable priority resource concerns'' and ``other priority resource 
concerns''. ``Applicable priority resource concerns'' represent 
resource issues within a watershed or portion of a State that NRCS is 
targeting for improvement. ``Other priority resource concerns'' are 
resource concerns that may or may not exist in a watershed but are 
currently not being targeted for improvement. These definitions allow 
NRCS to better describe how it is targeting resources to meet statutory 
objectives.
    A second discretionary change is the implementation of a $1,500 
minimum annual payment. Any CSP contract with an annual payment less 
than $1,500 is increased to $1,500. Comments submitted in response to 
CSP's Interim Rule (NRCS, 2014) suggest that CSP is not cost effective 
for small operations because payments are based on acres and not costs. 
Planning, management, machinery, and equipment costs, for example, 
typically decrease as operation size increases due to economies of 
scale. As shown, in table E2, this discretionary change negligibly 
increases program funds, does not impact any existing or new 
conservation activities, negligibly decreases cost-effectiveness, and 
does not change participant diversity with respect to the historically 
underserved.
    In summary, differences in program impacts between the 2008 CSP and 
the 2014 CSP can be attributed primarily to the program's smaller acre 
cap of 10 million acres. Statutory requirements related to contract 
renewals and proposed discretionary actions will result in a more 
focused approach to meeting conservation objectives and encouraging 
more participation of small operations.

List of Subjects in 7 CFR Part 1470

    Agricultural operation, Conservation activities, Natural resources, 
Priority resource concern, Stewardship threshold, Resource-conserving 
crop rotation, Soil and water conservation, Soil quality, Water quality 
and water conservation, Wildlife and forest management.

    Accordingly, the interim rule amending 7 CFR part 1470, which was 
published at 79 FR 65836 on November 5, 2014, is adopted as a final 
rule with the following changes:

PART 1470--CONSERVATION STEWARDSHIP PROGRAM

0
1. The authority citation for part 1470 continues to read as follows:

    Authority: 16 U.S.C. 3838d-3838g;


0
2. Amend Sec.  1470.24 by revising paragraphs (a)(1)(i), (a)(3), 
(b)(2), and (c) to read as follows:


Sec.  1470.24  Payments.

    (a) * * *
    (1) To receive annual payments, a participant must:
    (i) Install and adopt additional conservation activities as 
scheduled in the conservation stewardship plan. At least one additional 
conservation activity must be scheduled, installed, and adopted within 
the first 12 months of the contract. All enhancements must be 
scheduled, installed, and adopted by the end of the third fiscal year 
of the contract, unless the Chief approves a different schedule to meet 
specific conservation stewardship goals. Installed enhancements must be

[[Page 12583]]

maintained for the remainder of the contract period and adopted 
enhancements must recur for the remainder of the contract period.
* * * * *
    (3) Annual payments will be prorated over the contract term so as 
to accommodate, to the extent practicable, participants earning equal 
annual payments in each fiscal year;
* * * * *
    (b) * * *
    (2) A participant must adopt or improve the resource-conserving 
crop rotation during the term of the contract to be eligible to receive 
a supplemental payment. Unless the Chief approves a different schedule 
to meet the conservation stewardship goals of particular crop rotation 
sequences, a resource-conserving crop rotation:
    (i) Is considered adopted when the resource-conserving crop is 
planted on at least one-third of the rotation acres; and
    (ii) Must be adopted by the third fiscal year of the contract and 
planted on all rotation acres by the fifth fiscal year of the contract; 
and
* * * * *
    (c) Minimum contract payment. NRCS may make a minimum contract 
payment to a participant in any fiscal year in which the contract's 
payment amount total is less than a rate determined equitable by the 
Chief based upon the effort required by a participant to comply with 
the terms of the contract.
* * * * *

0
3. Amend Sec.  1470.25 by revising paragraph (d) and adding new 
paragraphs (e) through (g) to read as follows:


Sec.  1470.25  Voluntary contract modifications and transfers of land.

* * * * *
    (d) Within the time specified in the contract, a participant must 
provide NRCS with written notice regarding any voluntary or involuntary 
loss of control of any acreage under the CSP contract, which includes 
changes in a participant's ownership structure or corporate form. 
Failure to provide timely notice will result in termination of the 
entire contract.
    (e) Unless NRCS approves a transfer of contract rights under this 
paragraph, a participant losing control of any acreage will constitute 
a violation of the CSP contract and NRCS will terminate the contract 
and require a participant to refund all or a portion of any financial 
assistance provided. NRCS may approve a transfer of the contract if:
    (1) NRCS receives written notice that identifies the new producer 
who will take control of the acreage, as required in paragraph (d) of 
this section;
    (2) The new producer meets program eligibility requirements within 
a reasonable time frame, as specified in the CSP contract;
    (3) The new producer agrees to assume the rights and 
responsibilities for the acreage under the contract; and
    (4) NRCS determines that the purposes of the program will continue 
to be met despite the original participant's losing control of all or a 
portion of the land under contract.
    (f) Until NRCS approves the transfer of contract rights, the new 
producer is not a participant in the program and may not receive 
payment for conservation activities commenced prior to approval of the 
contract transfer.
    (g) NRCS may not approve a contract transfer and may terminate the 
contract in its entirety if NRCS determines that the loss of control of 
the land was voluntary, the new producer is not eligible or willing to 
assume responsibilities under the contract, or the purposes of the 
program cannot be met.

    Signed this 3rd day of March, 2016, in Washington, DC.
Jason A. Weller,
Chief, Natural Resources Conservation Service, Vice President, 
Commodity Credit Corporation.
[FR Doc. 2016-05419 Filed 3-9-16; 8:45 am]
 BILLING CODE 3410-16-P