Conservation Security Program: Despite Cost Controls, Improved	 
USDA Management Is Needed to Ensure Proper Payments and Reduce	 
Duplication with Other Programs (28-APR-06, GAO-06-312).	 
                                                                 
The Conservation Security Program (CSP)--called for in the 2002  
farm bill and administered by the U.S. Department of		 
Agriculture's (USDA) Natural Resources Conservation Service	 
(NRCS)--provides financial assistance to producers to reward past
conservation actions and to encourage further conservation	 
stewardship. CSP payments may be made for structural or land	 
management practices, such as strip cropping to reduce erosion.  
CSP has raised concerns among some stakeholders because CSP cost 
estimates generally have increased since the 2002 farm bill's	 
enactment. For example, the Congressional Budget Office's	 
estimate increased from $2 billion in 2002 to $8.9 billion in	 
2004. GAO determined (1) why CSP cost estimates generally	 
increased; (2) what authority USDA has to control costs and what 
cost control measures exist; and (3) what measures exist to	 
prevent duplication between CSP and other USDA conservation	 
programs and what duplication, if any, has occurred.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-312 					        
    ACCNO:   A52721						        
  TITLE:     Conservation Security Program: Despite Cost Controls,    
Improved USDA Management Is Needed to Ensure Proper Payments and 
Reduce Duplication with Other Programs				 
     DATE:   04/28/2006 
  SUBJECT:   Agricultural programs				 
	     Conservation					 
	     Conservation programs				 
	     Cost analysis					 
	     Cost control					 
	     Federal aid programs				 
	     Internal controls					 
	     Program management 				 
	     Sustainable agriculture				 
	     Cost estimates					 
	     Duplication of effort				 
	     Conservation Security Program			 

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GAO-06-312

     

     * Report to the Chairman, Committee on Appropriations, U.S. Senate
          * April 2006
     * CONSERVATION SECURITY PROGRAM
          * Despite Cost Controls, Improved USDA Management Is Needed to
            Ensure Proper Payments and Reduce Duplication with Other Programs
     * Contents
          * Results in Brief
          * Background
          * Estimates of CSP Costs Generally Increased because of Better
            Information on Program Implementation and Changes to the Time
            Frames Covered by the Estimates
               * Estimates of CSP Costs Generally Have Increased over Time
               * As More Information on CSP Implementation Became Available,
                 Cost Estimates Increased
               * Changing Time Frames Also Account for Increases in Estimates
          * USDA Has Authority to Control CSP Costs and Has Established Cost
            Control Measures but Needs to Improve Internal Controls and
            Better Ensure Consistency in NRCS State Offices' Determinations
            of Producer Eligibility
               * The Farm Bill Provides USDA Authority to Control CSP Costs
               * NRCS Established Cost Control Measures in CSP Regulations
                 Designed to Limit Program Enrollment and Payments
               * Some Fiscal Year 2004 CSP Contract Payments Exceeded Farm
                 Bill Payment Limits
               * Although NRCS Has Established Internal Controls, Weaknesses
                 in These Controls Increase the Risk of Improper Payments
               * Inconsistencies in State Office Determinations of Producer
                 Eligibility for CSP Payments May Undermine NRCS Cost
                 Controls and the Achievement of CSP's Intended Wildlife
                 Habitat Benefits
          * Despite Legislative and Regulatory Measures That Lessen Possible
            Duplication between CSP and Other Programs, the Potential for
            Duplicate Payments Still Exists, and Such Payments Have Occurred
               * Farm Bill Provisions Lessen the Potential for Duplication
               * NRCS Regulatory Measures and Procedures Further Distinguish
                 CSP from Other Programs
               * Potential for Duplication Still Exists and Duplicate
                 Payments Have Occurred
          * Conclusions
          * Recommendations for Executive Action
          * Agency Comments and Our Evaluation
     * Objectives, Scope, and Methodology
     * CSP Payments Information for Fiscal Years 2004 and 2005
     * CSP Application and Enrollment Process Flowchart
     * Other Key USDA Conservation Programs
     * Explanation of Budget Scoring
     * Time Line of Legislative Actions and CBO and OMB 10-Year Estimates of
       CSP Costs
     * Description of USDA and NRCS Internal Controls and the Results of
       Reviews of These Controls
     * Comments from the U.S. Department of Agriculture
          * GAO Comments
     * GAO Contact and Staff Acknowledgments
     * Related GAO Products

Report to the Chairman, Committee on Appropriations, U.S. Senate

April 2006

CONSERVATION SECURITY PROGRAM

Despite Cost Controls, Improved USDA Management Is Needed to Ensure Proper
Payments and Reduce Duplication with Other Programs

Contents

Tables

Figures

April 28, 2006Letter

The Honorable Thad Cochran Chairman Committee on Appropriations United
States Senate

Dear Mr. Chairman:

Farmers and ranchers own and manage about 940 million acres, or about half
of the continental United States' land area, and are thus among the most
important stewards of our soil, water, and wildlife habitat. Because of
this important responsibility, how private land is used is increasingly
recognized as vital to protecting the nation's environment and natural
resources. For example, to help protect water quality and conserve
wildlife habitat, private landowners have installed millions of acres of
conservation buffers.1 Despite these efforts, state water-quality agencies
report that agricultural production is still a leading contributor to
impaired water quality; similarly, habitat loss associated with
agriculture has been a factor in the declining populations of numerous
wildlife species, including many threatened or endangered native species.
Recognizing the critical role played by private landowners, Congress
significantly increased authorized funding for an array of conservation
programs managed by the U.S. Department of Agriculture (USDA) in the Farm
Security and Rural Investment Act of 2002 (farm bill).2 Specifically,
Congress authorized additional funding for these programs for fiscal years
2002 through 2007, estimated by the Congressional Budget Office (CBO) to
be $20.8 billion, nearly an 80 percent increase over the previous baseline
for these programs.3 Part of this increase was for several new
conservation programs

called for by the farm bill, including the Conservation Security Program
(CSP).

CSP supports ongoing conservation stewardship of agricultural lands by
providing financial and technical assistance to promote conservation and
the improvement of soil, water, air, energy, and plant and animal life on
private and tribal agricultural lands. Unlike other USDA conservation
programs that provide assistance to take new actions aimed at addressing
identified problems such as excessive soil erosion or nutrient runoff, CSP
is unique in that it rewards farmers and ranchers who already meet very
high standards of conservation and environmental management in their
operations. The program seeks to encourage these producers to continue and
further enhance their high level of stewardship while creating an
incentive for other producers to increase their level of stewardship in
order to qualify for CSP assistance as well. CSP is also unique among USDA
conservation programs in that Congress authorized it without placing
limits on either its funding or the number of acres enrolled, although at
times Congress has capped its funding in other legislation.4 CSP is open
to all eligible agricultural producers, regardless of size of operation,
crops produced, or geographic location. CSP is administered by USDA's
Natural Resources Conservation Service (NRCS) and funded through USDA's
Commodity Credit Corporation (CCC).5

CSP rewards three levels, or tiers, of conservation treatment for
qualified producers who enter into CSP contracts with NRCS.6 Tier I
participants must have addressed soil and water quality resource concerns
to a specified minimum level of treatment on at least part of the
participant's operation prior to applying to the program.7 Under this
tier, contracts are of 5-year duration, and annual payments of up to
$20,000 are to be made. Tier II participants must have addressed soil and
water quality resource concerns to the minimum level of treatment on the
entire agricultural operation prior to application and must treat an
additional significant resource concern as well. Under this tier,
contracts are of a 5- to 10-year duration, and annual payments of up to
$35,000 are to be made. In addition to addressing soil and water quality
resource concerns to specified minimum levels, Tier III participants must
have addressed all other applicable resource concerns, including wildlife
habitat, to a minimum level on their entire agricultural operation before
application. These additional resource concerns are described in the CSP
sign-up notice,8 and the related criteria for the minimum treatment levels
are provided in CSP regulations and may be further augmented by NRCS state
offices to reflect local conditions. For example, for the fiscal year 2004
and fiscal year 2005 CSP sign-ups, wildlife habitat management was
identified as an applicable resource concern in the sign-up notices. Under
Tier III, contracts are of a 5- to 10-year duration, and annual payments
of up to $45,000 are to be made.

Regardless of the tier, a producer's total CSP contract payment may
include up to four components: (1) an annual stewardship component for the
base level of conservation treatment required for program eligibility,9
(2) an annual existing practice component for the maintenance of existing
conservation practices,10 (3) an annual enhancement component for
additional activities that provide increased resource benefits beyond the
base level of conservation treatment that is required for program
eligibility,11 and (4) a one-time new practice component for additional
approved practices.12 In determining which CSP contract applications to
accept, NRCS first determines whether an application meets the minimum
requirements for Tier I, II, or III. NRCS then groups qualified
applications into one of five enrollment categories-defined by criteria
such as a producer's willingness to undertake additional conservation
activities-and funds the applications beginning with the highest category
in each tier until the available funding is exhausted. The farm bill
requires NRCS to provide technical assistance to producers for the
development and implementation of conservation security contracts but in
an amount not to exceed 15 percent of amounts expended for the fiscal
year.13

NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200 farmers
and ranchers participated in the program that year, with contracts
covering nearly 1.9 million acres in 18 watersheds in 22 states. Producer
payments totaled about $34.6 million in fiscal year 2004. For fiscal year
2005, NRCS approved over 12,700 CSP contract applications, covering over 9
million acres in 220 watersheds in 50 states and Puerto Rico. Producer
payments totaled about $171.4 million (including payments for contacts
approved in 2004) in fiscal year 2005. In January 2006, USDA announced
that it plans to offer CSP contracts to producers in an additional 60
watersheds during fiscal year 2006, with participants receiving an
estimated $220 million (including payments for contracts approved in 2004
and 2005). Over time, NRCS plans to accept CSP contract applications from
eligible producers in each of the nation's 2,119 watersheds.14

CSP has attracted considerable interest by stakeholders in Congress and in
farm, conservation, and environmental organizations for a variety of
reasons. Notably, cost estimates for CSP generally have increased since
the program's inception, and some stakeholders are concerned that CSP may
duplicate assistance provided under other USDA conservation programs.
Regarding program costs, estimates made by CBO and the Office of
Management and Budget (OMB) generally have increased over time. For
example, in May 2002, CBO estimated CSP would cost about $2 billion over
10 years. CBO revised its 10-year cost estimate to $7.8 billion in January
2003 and then increased it again to $8.9 billion in March 2004. OMB's
estimates also increased. In May 2002, OMB estimated CSP would cost $5.9
billion over 10 years. OMB increased its estimate to $9.7 billion in
January 2004. Regarding potential program duplication, some stakeholders
note that CSP and other USDA conservation programs appear to provide
financial and technical assistance for similar conservation activities,
such as creating conservation buffers around cropped fields, creating the
possibility that a producer could receive duplicate payments for the same
activity.

In this context, you asked us to determine (1) why CBO and OMB cost
estimates for CSP generally increased over time; (2) what authority USDA
has to control CSP costs and what cost control measures are in place; and
(3) what legislative and regulatory measures exist to prevent duplication
between CSP and other USDA conservation programs and what duplication, if
any, has occurred.

To determine why CSP costs estimates have increased, we interviewed CBO
and OMB officials and reviewed documentation they provided. We did not
attempt to re-estimate or audit the CBO or OMB estimates or data discussed
in this report. To determine USDA's authority to control CSP costs and the
cost control measures implemented, we reviewed relevant legislation, CSP
regulations, and NRCS's Conservation Programs Manual and related guidance.
We also interviewed NRCS and other USDA officials and reviewed
documentation they provided. To determine what legislative and regulatory
measures exist to prevent duplication between CSP and other conservation
programs and what duplication, if any, has occurred, we reviewed relevant
authorizing legislation and CSP regulations. We also interviewed NRCS and
other USDA officials and reviewed the documents they provided. In
addition, we interviewed NRCS officials specifically responsible for
developing a plan to coordinate USDA's conservation programs to, among
other things, eliminate redundancy. Furthermore, to identify apparent
cases of duplication, we reviewed and analyzed 2004 payments data for CSP
and two other USDA conservation programs that also provide assistance to
implement conservation practices on land used for agricultural production.
We then discussed these cases with NRCS officials to determine the extent
of duplication, if any. Finally, we interviewed officials and reviewed
documentation they provided at farm, conservation, and environmental
organizations. We conducted our review from February 2005 through February
2006 in accordance with generally accepted government auditing standards.
Appendix I provides additional information on our objectives, scope, and
methodology.

Results in Brief

Various factors explain why CBO and OMB estimates of CSP costs generally
have increased over time. Most importantly, agency officials indicated
that little information was available regarding how the program would be
implemented at the time of the original cost estimates in May 2002.
Consequently, these officials relied on their professional judgment and
past experience with estimating costs when making assumptions about key
aspects of CSP, such as the level of participation, number of acres
enrolled, and the amount and types of payments made. Later, when more
information became available as to how USDA planned to implement the
program, officials' estimates were better informed and more accurately
captured program costs, resulting in higher estimates. In addition,
increases in estimated CSP costs also can be attributed to revising the
time frames on which the estimates were based. The agencies' initial
estimates were based on the 10-year period fiscal years 2002 through 2011
and included years in which the program was not operational (2002 and
2003) or minimally operational (2004). The agencies' subsequent estimates
were based on different 10-year intervals. For example, CBO's and OMB's
fiscal year 2004 estimates were based on the 10-year period fiscal years
2005 through 2014 and assumed the program would be fully operational in
each of these years.

The farm bill provides USDA general authority to control CSP costs, and
while USDA has used its statutory authority to establish several cost
control measures, its efforts to control program spending may be enhanced
by addressing (1) weaknesses in internal controls used to ensure the
accuracy of program payments and (2) inconsistencies in the wildlife
resource criteria used by NRCS state offices to determine producer
eligibility for Tier III, the highest CSP payment level. More
specifically,

o the farm bill establishes some eligibility requirements for CSP, but
gives USDA the authority to establish additional requirements. For
example, the farm bill states that a payment under CSP "may" be received
under three tiers of conservation contracts and that the Secretary of
Agriculture "shall" determine and approve the minimum requirements for
each tier. Furthermore, under the legislation, payments for each tier are
not to exceed specified amounts, giving the Secretary of Agriculture the
discretion to set payments for each tier below these limits. Under this
statutory authority, NRCS implemented a number of CSP cost control
measures to restrain program spending primarily by either restricting
participation or limiting payments to individual producers. For example,
NRCS restricts CSP participation by limiting program enrollment each year
to producers in specified, priority watersheds. In addition, NRCS limits
annual stewardship payments to 25, 50, and 75 percent of the maximum
amount that the farm bill allows for Tiers I, II, and III, respectively.

o NRCS's cost control efforts may be undermined by weaknesses in the
internal controls the agency uses to ensure accurate program payments.
According to a January 2006 draft report, NRCS internal auditors found
problems with several aspects of the agency's implementation of CSP,
including its implementation of some internal controls. Among other
things, the auditors found weaknesses in quality assurance and case file
documentation. For example, they found that 33 of 55 fiscal year 2004 CSP
contracts studied had not had an annual contract review, as required by
NRCS's programs manual, to document that CSP participants are following
contract provisions. The absence of an annual contract review, according
to the internal auditors, could result in payments being made for
conservation activities that are not being done or are not yet completed
as scheduled in the producer's conservation security plan. NRCS plans to
prepare a management action plan describing its response to this draft
report's recommendations. In addition, other aspects of NRCS's internal
controls have been criticized. For example, in January 2005, the USDA
Inspector General reported that NRCS had neither identified the internal
control measures in place to preclude, or detect in a timely manner,
improper payments for the programs it administers, including CSP, nor did
it know if the controls were in operation.

o NRCS's cost control efforts also may be undermined by inconsistencies in
the wildlife habitat assessment criteria used by NRCS state offices, in
part, to determine producer eligibility for Tier III payments. For the
fiscal year 2004 CSP sign-up, according to NRCS, state offices developed
wildlife habitat assessment criteria that were extremely variable,
contributing significantly to differences in Tier III participation and
payments among the various watersheds. For example, among the nine
watersheds where cropland was the predominant type of land enrolled, the
percentage of payments going to Tier III contracts ranged from 0 to 75
percent. In response, NRCS developed national guidance that its state
offices were to follow in creating wildlife habitat assessment criteria.
However, we found-and NRCS officials agreed-that some state offices
developed and applied criteria for the fiscal year 2005 sign-up that were
inconsistent with the national guidance. For example, the criteria used in
watersheds under these states' jurisdiction did not require that a minimum
percentage (as determined by the relevant state office) of a producer's
operation be noncrop vegetative cover, such as grassy or riparian areas
managed for wildlife, as specified in the national guidance. Thus,
producers in these watersheds were eligible for Tier III payments even
though they may not have satisfied criteria for one of the resource
components that the national guidance specifies is necessary for
eligibility. Moreover, an NRCS official explained that although NRCS has
not undertaken a review to determine whether producers have qualified for
Tier III payments under this scenario, based on informal discussions with
field office staff, this official concluded that some producers received
such payments during the fiscal years 2004 and 2005 sign-ups. Finally, the
use of criteria that are inconsistent with the national guidance not only
weakens CSP cost control measures by making more Tier III payments
possible, it also reduces NRCS's ability to ensure that CSP is achieving
its intended wildlife habitat benefits. Despite the possible undesirable
outcomes associated with inconsistencies in state offices' wildlife
habitat assessment criteria, as of February 2006, NRCS had not reviewed or
field tested each state office's criteria and did not have plans to do so.
In addition, NRCS has not incorporated a reference to the national
guidance in its Conservation Programs Manual used by the agency's field
staff.

Various legislative and regulatory measures exist to reduce the potential
for duplication between CSP and other USDA conservation programs; however,
the possibility that producers can receive duplicate payments for the same
conservation action from CSP and other programs remains. Specifically, the
farm bill explicitly prohibits duplicate payments under CSP and other
conservation programs for the same practice on the same land. The farm
bill also prohibits NRCS from making payments under CSP for certain
activities that can be funded under other conservation programs, such as
the construction or maintenance of animal waste storage or treatment
facilities. Furthermore, NRCS designed its CSP regulations to prevent
duplication between CSP and other conservation programs. For example, the
regulations establish higher minimum eligibility standards for CSP than
exist for other programs, helping to differentiate the applicant pool for
CSP from the potential applicants for these other programs. The
regulations also encourage CSP participants to implement conservation
actions, known as enhancements, intended to achieve a level of treatment
that generally exceeds the level required by other USDA conservation
programs. However, despite statutory provisions and NRCS actions designed
to prevent CSP from duplicating other programs, the potential for
duplicate payments still exists and duplicate payments have occurred. In
particular, payments for CSP's conservation enhancements-which represented
about 81 percent of total CSP payments in fiscal years 2004 and 2005-could
duplicate payments for other programs' conservation practices.  For
example, in the course of performing limited file reviews at several NRCS
field offices, we found a case where a producer received payments under
CSP and another program in 2004 for the same conservation
activity-establishing a small grain cover crop-on the same tract of land.
Furthermore, our analysis of 2004 payments data for CSP and two other USDA
conservation programs revealed other potential examples of duplicate
payments. Specifically, we found 121 cases of payments that were made
under CSP and another program that year that were potentially duplicates.
We then selected 12 of these cases for further investigation, and we found
that in 8 cases duplicate payments had occurred. NRCS officials
acknowledged that duplicate payments had occurred in 4 of these cases but
did not agree in the other 4 cases. Finally, NRCS officials stated the
agency lacks a comprehensive process to either preclude duplicate payments
or identify them after a contract has been awarded. Instead, these
officials said that NRCS relies on the institutional knowledge of its
field staff and the records they keep as a guard against potential
duplication.

In light of these findings, we are recommending that USDA direct NRCS to
(1) review its state offices' wildlife habitat assessment criteria to
ensure consistency with the agency's national guidance for developing
these criteria; (2) include a reference to the national guidance in its
Conservation Programs Manual to emphasize the importance of this guidance;
(3) establish a comprehensive process to identify potential duplicate
payments in the future, as well as such payments that already may have
been made under existing CSP contracts; and (4) take action to recover
duplicate payments already made.

In commenting on a draft of this report, NRCS generally agreed with the
findings and recommendations and provided information on actions it has
taken, is taking, or will take to implement them. NRCS's comments are
reprinted in appendix VIII. NRCS also provided us with suggested technical
corrections, which we incorporated into this report as appropriate.

We also provided a draft of this report to CBO and OMB for review and
comment. Their clarifying comments were incorporated into this report as
appropriate.

Background

CSP, called for under section 2001 of the 2002 farm bill,15 is a voluntary
conservation program that supports ongoing stewardship of private and
tribal agricultural lands by providing payments to producers for
maintaining and enhancing natural resources. According to USDA, CSP
identifies and rewards those farmers and ranchers who are meeting the
highest standards of conservation and environmental management on their
operations, while creating powerful incentives for other producers to meet
those same standards of conservation performance. In turn, the
conservation benefits gained will help these farms and ranches to be more
economically and environmentally sustainable while increasing natural
resources benefits to society at large.

CSP provides financial and technical assistance to agricultural producers
who advance the conservation and improvement of soil, water, air, energy,
plant and animal life, and other conservation purposes on working lands.
Such lands include cropland, grassland, prairie land, improved pasture,
and rangeland, as well as forested land and other noncropped areas that
are an incidental part of the agriculture operation. The program is
available in all 50 states, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Virgin Islands of the United States, American
Samoa, the Commonwealth of the Northern Marianna Islands, and the Trust
Territory of the Pacific Islands. Under the farm bill, the program is open
to all agricultural producers, regardless of size of operation, crops
produced, or geographic location. CSP is administered by NRCS.

In implementing CSP, NRCS emphasizes soil and water quality as nationally
important resource concerns because of the potential for significant
environmental benefits from conservation treatment that improves their
condition. Thus, although the farm bill required producers to treat at
least one resource of concern under CSP, NRCS program regulations require
producers to treat at least two resources-soil and water-to be eligible
for the program.16 Producers can use CSP payments to fund a variety of
soil and water quality conservation practices. Soil quality practices
include crop rotation, planting cover crops, tillage practices, prescribed
grazing, and providing adequate wind barriers. Water quality practices
include conservation tillage, strip cropping, vegetative filter strips,
terraces, grassed waterways, managed access to water courses, nutrient and
pesticide management, prescribed grazing, and irrigation water management.
In addition, under the farm bill and NRCS regulations, to be eligible for
CSP, both the producer and the producer's operation must first meet
several basic eligibility criteria, including (1) the land must be private
agricultural land, forested land that is an incidental part of an
agricultural operation, or tribal land with the majority of the land
located within a selected priority watershed; (2) the applicant must be in
compliance with highly erodible land and wetlands provisions of the Food
Security Act of 1985 and generally must have control of the land for the
life of the contract; and (3) the applicant must share in the risk of
producing any crop or livestock and be entitled to a share in the crop or
livestock available for marketing from the operation.

The farm bill establishes three tiers or levels of participation. Each
tier has a specified contract period and an annual payment limit and calls
for a plan addressing resources of concern (as further delineated in NRCS
regulations), as indicated in table 1.

Table 1: CSP Payment Tiers

Tier Contract period Annual payment  Conservation criteria                 
                                 limit                                        
        (years)                         (The producer must have addressed...) 
I    5                      $20,000  water and soil quality to meet        
                                        specified minimum levels of treatment 
                                        on part of the agricultural operation 
                                        prior to enrollment.                  
II   5 to 10                 35,000  water and soil quality to meet        
                                        specified minimum levels of treatment 
                                        on the entire agricultural operation  
                                        prior to enrollment and agree to      
                                        address at least one additional       
                                        locally significant resource concern  
                                        by the end of the contract.a          
III  5 to 10                $45,000  all existing resource concerns to     
                                        meet specified minimum levels of      
                                        treatment on the entire agricultural  
                                        operation.                            

Source: 2002 farm bill and NRCS's CSP regulations.

aProducers can satisfy the requirement to address an additional resource
of concern by demonstrating that the locally significant resource concern
is not applicable to their operation or that they have already addressed
it in accordance with NRCS's quality criteria.

In addition to these tiers, NRCS's program regulations and sign-up
announcements establish enrollment categories and subcategories. Under
NRCS regulations, enrollment categories may be defined by criteria related
to resource concerns and levels of historic conservation treatment,
including a producer's willingness to achieve additional environmental
performance or conduct conservation enhancement activities. For the fiscal
year 2005 sign-up, five enrollment categories (A through E) were used for
cropland, pasture, and rangeland. For example, for cropland, the
enrollment categories were defined by various levels of soil conditioning
index scores and the number of stewardship practices and activities in

place on the farm for at least 2 years.17 All applications that met the
sign-up criteria were placed in an enrollment category, regardless of
available funding. NRCS then funded all eligible producers enrolled in
category A before funding producers in category B and subsequent
categories until available funding was exhausted.18 If an enrollment
category could not be fully funded, then the subcategories were used to
determine application funding order within a category. For the fiscal year
2005 sign-up, 12 subcategories were used. These subcategories included
factors such as whether (1) the applicant is a limited resource producer
or a participant in an ongoing environmental monitoring program; (2) the
agricultural operation is in a designated water conservation area or
aquifer zone, drought area, or nonattainment area for air quality; or (3)
the agricultural operation is in a designated area for threatened and
endangered species habitat creation and protection.

The producer's CSP contract identifies the type and amount of program
payments that a producer will receive. NRCS has established criteria for
calculating each of the four components of the program payment. For
example, the stewardship component is based on the number of acres
enrolled in CSP, the stewardship payment rate established for the
watershed, and reduction factors based on the tier of enrollment. At a
minimum, all CSP contract payments include amounts for the stewardship and
existing practice components. To be eligible to participate in CSP, the
producer must develop a conservation security plan (also known as a
conservation stewardship plan) that identifies the land and resources to
be conserved; describes the tier of conservation security contract and the
particular conservation practices to be implemented, maintained, or
improved; and contains a schedule for the implementation, maintenance, or
improvement of these practices. This plan must be submitted to and
approved by NRCS.

According to NRCS, about 1.8 million farmers and ranchers nationwide are
potentially eligible for CSP. However, the agency has chosen a staged
approach to implementing CSP, based on limiting program sign-ups to
selected, priority watersheds each year.19 In part, this reflects CSP's
newness. As with any new program, there have been birthing and growing
pains as the agency has grappled with developing program regulations,
training its staff, outreaching to producers and stakeholder groups, and
adjusting program implementation based on lessons learned from one program
sign-up year to the next. NRCS also chose a staged approach in light of
limited program funding-Congress authorized caps for total CSP funding in
fiscal year 2004 and for salaries and expenses of personnel to carry out
CSP in fiscal years 2005 and 200620-and the statutory limitation on the
amount of CSP funding that can be used for technical assistance-NRCS
cannot incur technical assistance costs in excess of 15 percent of the
funds expended in a given fiscal year for CSP. According to NRCS, focusing
on priority watersheds reduces the administrative burden on applicants and
the costs of processing a large number of applications that cannot be
funded. In addition, the agency notes that everyone in the United States
lives in a watershed and, because each year producers in approximately
one-eighth of the nation's 2,119 watersheds will be eligible for the
sign-up, all eligible producers will have the opportunity to participate
over an 8-year period, subject to available funding.

NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200 farmers
and ranchers participated in the program that year with contracts covering
nearly 1.9 million acres in 18 watersheds in 22 states. Producer payments
totaled about $34.6 million in fiscal year 2004, and NRCS used about $5.9
million for technical assistance.21 For fiscal year 2005, NRCS approved
over 12,700 CSP contract applications, covering nearly 9 million acres in
220 watersheds in 50 states and Puerto Rico. These 220 watersheds included
the 18 watersheds covered by the fiscal year 2004 sign-up. Producer
payments totaled about $171.4 million (including payments for contracts
approved in 2004) in fiscal year 2005, and NRCS used about $30.2 million
for technical assistance.22 In January 2006, USDA announced that it plans
to offer CSP contracts to producers in an additional 60 watersheds during
fiscal year 2006, with participants receiving an estimated $220 million
(including payments for contracts approved in 2004 and 2005).23 More
detail on the CSP payments made in fiscal years 2004 and 2005 is
summarized in appendix II, including information on these payments by
tier, payment type, and enhancement type. Figure 1 shows the watersheds
included in the fiscal year 2004 and fiscal year 2005 CSP sign-ups.

Figure 1: Watersheds Included in the Fiscal Year 2004 and Fiscal Year 2005
CSP Sign-ups

Note: NRCS allowed the 18 watersheds included in the fiscal year 2004
sign-up to be reopened only for new applicants for the fiscal year 2005
sign-up. This was because NRCS received many complaints from producers in
these watersheds that they did not have sufficient time or did not know
enough about CSP to apply for assistance under the program in the fiscal
year 2004 sign-up. The arrows denote some of the smaller watersheds
included in the fiscal year 2005 sign-up.

In general, NRCS implements CSP by (1) offering periodic sign-ups in
specific, priority watersheds across the Nation; (2) requiring producers
to complete a self-assessment, including a description of conservation
activities on their operations, to determine their eligibility for the
program;24 (3) scheduling interviews with eligible producers in local NRCS
field offices to review the producers' applications; (4) determining which
program tier and enrollment category an eligible producer may participate
in; (5) selecting the enrollment categories to be funded for CSP
contracts; (6) developing conservation security plans and contracts for
the producers selected; and (7) making the associated payments. Appendix
III provides a flowchart describing the CSP application and enrollment
process in more detail. Applicants may submit only one application for
each sign-up. Producers who are participants in an existing CSP
conservation stewardship contract are not eligible to submit another
application.

Many stakeholders refer to CSP as an "entitlement" program.25 However, the
farm bill does not refer to the creation of any entitlements under the
program. Moreover, the legislation provides the Secretary of Agriculture
with discretion to establish additional eligibility requirements, provides
that the Secretary must approve a producer's conservation security plan
before entering into a conservation security contract, and only states
that payments "may" be received under three tiers of contracts. Thus, CSP
is not an entitlement program.

Finally, many proponents of CSP maintain that this program will help U.S.
producers stay competitive in the world market while providing significant
societal environmental benefits. These proponents note that traditional
farm commodity programs tend to distort trade and will thus face
increasing pressure for reduction or elimination in the next round of
World Trade Organization talks.26 However, they note, "green payments"
programs such as CSP that are designed to promote conservation and
stewardship of natural resources on working lands are more likely to
survive in these talks.27 They also maintain that several European
countries are far ahead of the United States in using green payments
programs to provide financial assistance to their producers while
promoting conservation and environmental stewardship. CSP is generally
regarded as the most comprehensive green payments program developed in the
United States, primarily because CSP promotes integrated, whole-farm
planning for conservation.

Information on other USDA conservation programs is presented in appendix
IV.

Estimates of CSP Costs Generally Increased because of Better Information
on Program Implementation and Changes to the Time Frames Covered by the
Estimates

Various factors explain why CBO and OMB estimates of CSP costs generally
have increased over time. Of most importance, CBO and OMB officials
indicated that little information was available regarding how the program
would be implemented at the time of its inception in May 2002. Subsequent
estimates have been better informed because USDA had developed and
implemented program regulations and had data on the number of participants
from program sign-ups. In addition, increases in estimated CSP costs also
can be attributed to revising the time frames on which the estimates were
based. In general, this involved replacing estimates from earlier years
during which the program was not operational, or minimally operational,
with later years during which the program is expected to be more fully
operational.

Estimates of CSP Costs Generally Have Increased over Time

Over time, CBO and OMB each made several estimates of CSP costs for
specified 10-year periods, and these estimates generally increased.28 CBO
and OMB developed these estimates as part of their responsibilities for
budget scoring (also known as scorekeeping). These responsibilities are
discussed in appendix V. As reflected in figure 2, CBO and OMB estimates
generally increased during the period 2001 through 2006, although at times
the estimates dropped because of legislative actions to cap or limit CSP
funding. Appendix VI also provides a more detailed time line of
legislative actions and CBO and OMB 10-year estimates of CSP costs during
the period 2001 through 2006.

Figure 2: Comparison of CBO and OMB 10-Year Estimates of CSP Costs

Notes: (1) CBO's December 2001 estimate was based on an early Senate
version of the farm bill, S. 1731. The farm bill, which called for
establishment of CSP, was enacted into law on May 13, 2002. (2) The
Deficit Reduction Act of 2005 repealed the $6.0 ($6.037) billion cap for
fiscal years 2005 through 2014. Instead, the act limits CSP spending to
$1.954 billion for fiscal years 2006 through 2010 and to $5.650 billion
for fiscal years 2006 through 2015.

As shown in the figure, CBO made its first estimate of CSP costs-$3.7
billion for fiscal years 2002 through 2011-in December 2001, about 5
months before the farm bill was enacted (May 13, 2002). At the time, CBO
based its estimate on the Senate's version of the farm bill; the House of
Representative's version of the farm bill did not include provisions for
CSP at that time.29 In early May 2002, just before the farm bill's
enactment, CBO estimated CSP costs to be $2 billion for the same 10-year
period. CBO officials cited changes in the final bill's provisions as the
basis for the reduction in its estimate.30 They also cited an agreement
they stated had been reached by members of the Senate Agriculture
Committee that only $2 billion of the new funds to be made available for
the farm bill's conservation title would be used for CSP. The farm bill,
as enacted, does not specifically include a $2 billion limit; however, it
does include language that CBO officials said would result in reducing
program costs to about $2 billion. OMB also made its first estimate of CSP
costs-$5.9 billion for fiscal years 2002 through 2011-in May 2002, soon
after the farm bill's enactment. OMB officials said that, although they
were aware of an agreement reached in the Senate to limit CSP funding to
$2 billion, because this limit was not included in the final legislation,
they disregarded it in making their cost estimate. As a result, OMB's cost
estimate was nearly three times larger than CBO's estimate, although both
estimates were made in May 2002, were based on the same farm bill
provisions, and covered the same 10-year period.

As indicated by the figure, subsequent CBO and OMB estimates of CSP costs
were more similar and generally increased, except in cases where one or
both agencies' estimates reflected legislative actions to cap or limit CSP
funding. For example, in January 2003, CBO estimated CSP costs to be $7.8
billion for the 10-year period fiscal years 2004 through 2013. In February
of that year, Congress enacted legislation that capped CSP funding at
approximately $3.8 billion through fiscal year 2013 in order to, according
to OMB, generate savings for drought disaster assistance.31 The following
month, in light of this cap, OMB estimated CSP costs to be $3.8 billion
for fiscal years 2004 through 2013. However, in January 2004, Congress
repealed the $3.8 billion cap.32 As a result, subsequent OMB and CBO
estimates increased substantially.

Congress acted again to cap CSP funding in October 2004, passing
legislation to 1imit the program's funding to approximately $6 billion for
the 10-year period fiscal years 2005 through 2014.33 This action was taken
to offset emergency supplemental appropriations for hurricane disaster
assistance. Later that month, because of the cap, OMB estimated CSP costs
to be $6 billion for the same period. However, in January 2004, about 9
months earlier, OMB had estimated the costs for this 10-year period to be
$9.7 billion.

In 2005, both agencies estimated CSP costs to be $6.7 billion for the
10-year period fiscal years 2006 through 2015. In large measure, these
estimates reflected the $6 billion legislative cap covering fiscal years
2005 through 2014.34 However, that cap was scheduled to expire at the end
of fiscal year 2014, meaning the estimated costs for fiscal year 2015 were
not subject to a cap. In February 2006, Congress repealed the $6 billion
cap, replacing it with caps of $1.954 billion for fiscal years 2006
through 2010 and $5.650 billion for fiscal years 2006 through 2015.35 The
estimate made by OMB in January 2006-$6.2 billion for fiscal years 2007
through 2016-anticipated this change. CBO's March 2006 estimate for fiscal
years 2007 through 2016 was $6.4 billion.

As More Information on CSP Implementation Became Available, Cost Estimates
Increased

According to CBO and OMB officials, the primary reason for increases in
their estimates of CSP costs over time is that subsequent estimates have
been better informed. Specifically, subsequent estimates have been better
informed by USDA's development and implementation of program regulations
and data from the results of program sign-ups. As a result, these
estimates more accurately capture program costs, resulting in higher
estimates.

At CSP's inception in May 2002, little information was available about how
it would be implemented and the expected level of producer participation.
CBO and OMB officials noted that the farm bill provided a basic framework
for CSP and only a very limited basis for cost estimation, giving USDA
wide discretion on how to implement the program. Consequently, these
officials had to rely on their professional judgment and past experience
with estimating costs when making assumptions about key aspects of CSP,
such as the level of participation, number of acres enrolled, land rental
rates,36 and the amount and types of payments made. However, according to
CBO and OMB officials, CSP's uniqueness made this more difficult as these
officials had not made cost estimates for a similar program in the past.

Later, NRCS's development of CSP regulations provided key information on
how the program would be implemented. In this regard, NRCS issued an
advance notice of proposed rulemaking in February 2003; a proposed rule in
January 2004; an interim final rule in June 2004; and an amended interim
final rule in March 2005. For example, the proposed rule indicated that
NRCS planned to limit enrollments to specific sign-up periods rather than
allow continuous sign-ups; limit CSP enrollment to producers in selected,
priority watersheds rather than offer nationwide enrollment for a given
sign-up; and prioritize funding by way of enrollment categories to ensure
that producers with the highest commitment to conservation are funded
first. The amended interim final rule incorporates each of these elements.
In addition, CBO and OMB officials had informal conversations with NRCS
officials to obtain information on how the agency intended to implement
the program. For example, CBO officials said that they learned that NRCS
anticipated program participation would be greater than it originally
expected and that enhancement payments would be a more important

component of total producer payments than originally planned.37 OMB also
reviewed and commented on NRCS's proposed and interim final rules before
their publication in the Federal Register.38 And CBO and OMB officials
indicated that they conferred with one another from time to time to
discuss issues related to estimating CSP costs, although the agencies
arrived at their estimates independently.

Finally, CBO and OMB officials stated that after making their initial CSP
cost estimates at the program's inception, they had more time to develop
subsequent estimates, including more time to gather and consider program
implementation information. They also said that their future estimates of
program costs will be even better informed as more data become available
from each annual CSP sign-up, including data on program participation and
the mix of payments made by tier and type.

Changing Time Frames Also Account for Increases in Estimates

CBO and OMB officials also attributed increases in their CSP cost
estimates to revisions in the time frames on which the estimates were
based.39 In making their initial estimates in May 2002, CBO and OMB took
into account a time lag assumed for program development and implementation
by NRCS, which included the time needed for rulemaking and public comment,
training NRCS field staff, and outreach to producers and stakeholder
groups. Thus, these initial estimates, covering the 10-year period fiscal
years 2002 through 2011, included years in which the program was either
not expected to be operational, such as fiscal years 2002 and 2003, or
minimally operational, such as fiscal year 2004. For example, in CBO's May
2002 estimate, the costs associated with these first 3 fiscal years
totaled only $22 million. In contrast, CBO's March 2004 estimate, covering
a later 10-year period, fiscal years 2005 through 2014, assumed the
program would be fully operational in each of these years. CBO's cost
estimates for the three additional fiscal years-2012, 2013, and
2014-totaled $3.1 billion. Thus, the substitution of fiscal years 2012
through 2014 in the latter estimate for fiscal years 2002 through 2004 in
the earlier estimate amounted to an increase of more than $3 billion and
helps to explain, in part, why the subsequent estimate was greater. Table
2 provides further information on CBO estimates of CSP costs for various
10-year periods during fiscal years 2002 through 2016.

Table 2: CBO's CSP Cost Estimates, Fiscal Years 2002 through 2016

Dollars  
in       
millions 
         Estimates      
         by fiscal      
           year         
Date of       2002 2003 2004 2005 2006 2007 2008 2009  2010  2011  2012  2013  2014 2015   2016 10-year 
estimate                                                                                          total 
May 2002         0   $3  $19  $55 $110 $182 $267 $361  $459  $544     -     -     -    -      -  $2,000 
January          a    a   73  177  319  493  687  877 1,050 1,207 1,378 1,499     -    -      -   7,760 
2003                                                                                            
March            -    a    a  282  649  846  942  993 1,018 1,032 1,039 1,045 1,050    -      -   8,896 
2004                                                                                            
March            -    -    a    a  331  450  582  676   737   761   767   768   761  835      -   6,668 
2005b                                                                                           
March            -    -    -    a    a $373 $446 $436  $440  $579  $685  $763  $794 $875 $1,008  $6,399 
                                                                                                
2006c                                                                                           

Source: CBO.

Note: Dashes (-) indicate that CBO did not include an estimate for that
fiscal year.

aEstimates were provided for these years but were not included in the
table to show only the years included in the 10-year estimate total.

bThis is a capped estimate for all years except 2015, based on legislation
capping the program at $6.037 billion over 10 years (fiscal years 2005
through 2014) to help pay for agricultural disaster assistance.

cThis is a capped estimate for all years except 2016 based on the Deficit
Reduction Act of 2005 that established caps on program funding of $1.954
billion for fiscal years 2006 through 2010 and $5.650 billion for fiscal
years 2006 through 2015.

A similar pattern can be seen with OMB's estimates. OMB's May 2002
estimate, covering the 10-year period fiscal years 2002 through 2011,
included fiscal years 2002, 2003, and 2004, years in which the program was
assumed not to be implemented or only minimally implemented. OMB's
estimate for these 3 fiscal years was $98 million. In contrast, OMB's
January 2004 estimate, covering a later 10-year period, fiscal years 2005
through 2014, included three additional years, fiscal years 2012, 2013,
and 2014. OMB's estimate for these years was $4.049 billion. Thus, the
substitution of fiscal years 2012 through 2014 in the latter estimate for
fiscal years 2002 through 2004 in the earlier estimate amounted to an
increase of about $3.95 billion and helps to explain, in part, why the
subsequent estimate was greater. Table 3 provides further information on
OMB estimates of CSP costs for various 10-year periods during fiscal years
2002 through 2016.

Table 3: OMB's CSP Cost Estimates, Fiscal Years 2002 through 2016

Dollars            
in              
millions           
         Estimates      
         by fiscal      
           year         
Date of       2002 2003 2004 2005 2006 2007 2008   2009   2010   2011  2012  2013  2014 2015 2016 10-year 
estimate                                                                                            total 
May 2002         0  $11  $87 $270 $442 $659 $870 $1,015 $1,183 $1,278     -     -     -    -            - $5,858 
March            -    -   10   77  166  261  356    442    527    612   658   681     -    -            -  3,788 
                                                                                                          
2003b                                                                                                     
January          -    -    a  249  457  665  873  1,046  1,118  1,191 1,264 1,337 1,448    -            -  9,650 
2004                                                                                                      
October          -    -    -  249  348  465  582    675    668    704   740   777   832    -            -  6,041 
2004c                                                                                                     
January          -    -    -    a  314  470  559    648    693    738   760   804   849  893            -  6,728 
                                                                                                          
2005d                                                                                                     
January          -    -    -    -    a $342 $396   $456   $500   $640  $723  $719  $783 $831         $831 $6,222 
2006e                                                                                                     

Source: OMB.

Note: Dashes (-) indicate that OMB did not include an estimate for that
fiscal year.

aEstimates were provided for these years but were not included in the
table to show only the years included in the 10-year estimate total.

bThis is a capped estimate based on legislation capping the program at
$3.773 billion over 11 years (fiscal years 2003 through 2013) to,
according to OMB, help pay for drought disaster assistance. This cap was
later removed in early 2004.

cThis is a capped estimate based on legislation capping the program at
$6.037 billion over 10 years (fiscal years 2005 through 2014) to help pay
for agricultural disaster assistance.

dThis is a capped estimate for all years except fiscal year 2015.

eThis is a capped estimate for all years except fiscal year 2016 based on
the Deficit Reduction Act of 2005 that established caps on program funding
of $1.954 billion for fiscal years 2006 through 2010 and $5.650 billion
for fiscal years 2006 through 2015.

USDA Has Authority to Control CSP Costs and Has Established Cost Control
Measures but Needs to Improve Internal Controls and Better Ensure
Consistency in NRCS State Offices' Determinations of Producer Eligibility

The farm bill provides USDA general authority to control CSP costs. While
USDA's NRCS has established several cost control measures under this
statutory authority, its efforts to restrict program spending could be
improved by addressing (1) weaknesses in internal controls used to ensure
the accuracy of program payments and (2) inconsistencies in the wildlife
resource criteria used by NRCS state offices to determine producer
eligibility for Tier III, the highest CSP payment level. Furthermore,
because of inconsistencies in wildlife resources criteria, NRCS cannot
ensure that CSP is achieving its intended wildlife habitat benefits.

The Farm Bill Provides USDA Authority to Control CSP Costs

The farm bill establishes some eligibility requirements for CSP but gives
USDA the authority to establish additional requirements that would enable
it to control CSP costs, even absent legislative caps on CSP funding. For
example, the farm bill establishes some producer and land eligibility
requirements for CSP but also states that a payment under CSP "may" be
received under three tiers of conservation contracts and that the
Secretary of Agriculture "shall" determine and approve the minimum
eligibility requirements for each tier-giving USDA the authority to
establish additional eligibility requirements that would enable it to
control program participation and, therefore, CSP costs.40 This provision,
for example, gives the Secretary discretion to establish a tier
eligibility requirement that a producer be located within a specified
watershed. The Secretary also must approve a producer's conservation
stewardship plan-as meeting both the statutory eligibility requirements
and any tier requirements-for the producer to be eligible to participate
in CSP.41 In addition, the Secretary must ensure that the lowest cost
conservation practice alternative is used to fulfill the purposes of the
plan.42 Furthermore, the farm bill sets a payment limit for each tier
level ($20,000 for Tier I; $35,000 for Tier II; and $45,000 for Tier III)
but, in stating that payments shall be determined by the Secretary and
shall not exceed such amounts, provides discretion to the Secretary to
further limit the payment amounts.43

NRCS Established Cost Control Measures in CSP Regulations Designed to
Limit Program Enrollment and Payments

Under the statutory authority provided by the farm bill, NRCS has
implemented a number of CSP cost control measures to restrain program
spending, primarily by either restricting CSP enrollment or limiting
payments to individual producers. For example, NRCS restricts CSP
participation by limiting program enrollment each year to producers in
specified, priority watersheds. In addition, NRCS limits annual
stewardship payments to 25, 50, and 75 percent of the maximum amount that
the farm bill allows for Tiers I, II, and III, respectively. Key cost
control measures-found either in the farm bill, in CSP regulations, or in
the program sign-up notice-in place for the fiscal year 2005 CSP sign-up
are described in table 4.

Table 4: Key Farm Bill and Regulatory Cost Control Measures Used in the
Fiscal Year 2005 CSP Sign-up

                                        

       Cost control             Farm bill          NRCS's CSP regulations and 
         measures                                   fiscal year 2005 sign-up  
                                                             notice           
Program enrollment   No specific language to    One of the eligibility     
limited to specified restrict enrollment based  requirements is that a     
watersheds           on location. However, the  majority of the            
                        Secretary of Agriculture   agricultural operation     
                        shall determine and        must be within a watershed 
                        approve the minimum        selected for sign-up.      
                        eligibility requirements   According to NRCS,         
                        for each tier.             limiting enrollment each   
                                                   year to priority           
                                                   watersheds enables NRCS to 
                                                   adjust the potential scope 
                                                   of the program in          
                                                   accordance with the        
                                                   available funding. In      
                                                   addition, according to     
                                                   NRCS, this approach        
                                                   constrains technical       
                                                   assistance costs           
                                                   associated with processing 
                                                   CSP applications by        
                                                   limiting the number of     
                                                   applications.              
Sign-ups are         No specific language       CSP enrollment is          
periodic, not        regarding when sign-ups    restricted to specified    
continuous           should occur.              sign-up periods. For       
                                                   example, the fiscal year   
                                                   2005 sign-up period ran    
                                                   from March 28, 2005,       
                                                   through May 27, 2005.      
Minimum conservation Tier I: An applicant       Tier I: An applicant must  
treatment            must-in a plan of          have addressed both soil   
requirements for     conservation practices-(1) and water (i.e., two)      
eligibility          address at least one       resource concerns on at    
                        significant resource of    least part of the          
                        concern for the enrolled   operation to a specified   
                        portion of the             minimum level of           
                        agricultural operation at  treatment.b                
                        a level that meets the                                
                        appropriate nondegradation Tier II: An applicant must 
                        standard and (2) cover     have addressed both soil   
                        active management of       and water (i.e., two)      
                        conservation practices     resource concerns on the   
                        that are implemented or    entire operation to a      
                        maintained under the       specified minimum level of 
                        conservation security      treatment. In addition,    
                        contract.a                 the applicant must agree   
                                                   to address an additional   
                        Tier II: An applicant      resource concern by the    
                        must-in a plan of          end of the contract        
                        conservation practices-(1) period.                    
                        address at least one                                  
                        significant resource of    Tier III: An applicant     
                        concern for the entire     must have addressed all    
                        agricultural operation at  applicable resource        
                        a level that meets the     concerns on the entire     
                        appropriate nondegradation operation to a specified   
                        standard and (2) cover     minimum level of           
                        active management of       treatment.d                
                        conservation practices     
                        that are implemented or    
                        maintained under the       
                        conservation security      
                        contract.                  
                                                   
                        Tier III: An applicant     
                        must-in a plan of          
                        conservation practices-(1) 
                        apply a resource           
                        management system that     
                        meets the appropriate      
                        nondegradation standard    
                        for all resources of       
                        concern for the entire     
                        agricultural operation and 
                        (2) cover active           
                        management of conservation 
                        practices that are         
                        implemented or maintained  
                        under the conservation     
                        security contract.c        
Prioritization of    No specific language to    New program enrollments    
eligible             prioritize eligible        may be limited in any      
applications for     applications. However, the fiscal year to enrollment  
funding              Secretary of Agriculture   categories designed to     
                        shall determine and        focus on priority          
                        approve the minimum        conservation concerns and  
                        eligibility requirements   enhancement measures. For  
                        for each tier.e            the fiscal year 2005       
                                                   sign-up, NRCS placed all   
                                                   eligible applications into 
                                                   five enrollment categories 
                                                   that prioritized           
                                                   applications for funding.  
                                                   Beginning with the highest 
                                                   enrollment category, NRCS  
                                                   accepted applications      
                                                   until the available        
                                                   funding was exhausted.f    
Requirement for      No specific language to    An applicant must provide  
documentation of     require documentation of   NRCS with documentation    
existing             existing conservation      that includes information  
conservation         treatment. However, the    on existing conservation   
treatment            Secretary of Agriculture   practices, treatment, and  
                        shall determine and        activities on the          
                        approve the minimum        applicant's operation.     
                        eligibility requirements   NRCS used this information 
                        for each tier.             to determine if the        
                                                   application met the        
                                                   minimum eligibility        
                                                   requirements and, if so,   
                                                   to place the application   
                                                   in an enrollment category. 
Limits on total CSP  Annual contract payments   The payment limits per     
contract payments    to an individual or entity contract were not changed. 
                        shall not exceed $20,000   A CSP applicant may submit 
                        for Tier I; $35,000 for    only one application per   
                        Tier II; and $45,000 for   sign-up period and have    
                        Tier III.                  only one active contract   
                                                   at any time.               
Limits on            Annual stewardship         Further reduces the        
stewardship (base)   payments are limited to    stewardship payment to a   
payments             $5,000 for Tier I, $10,500 percentage of the amount   
                        for Tier II, and $13,500   calculated under the farm  
                        for Tier III. For a given  bill formula (i.e., 25     
                        contract, the stewardship  percent for Tier I, 50     
                        payment is based on (1)    percent for Tier II, and   
                        the average national       75 percent for Tier III).  
                        per-acre rental rate for a 
                        specific land use during   
                        the 2001 crop year or      
                        another appropriate rate   
                        for the 2001 crop year     
                        that ensures regional      
                        equity and (2) a           
                        tier-specific percentage   
                        (i.e., 5 percent for Tier  
                        I; 10 percent for Tier II; 
                        and 15 percent for Tier    
                        III).                      
Limits on existing   Payments to maintain       Existing practice payments 
conservation         existing conservation      may be limited for any     
practice             practices are limited to   given sign-up. For the     
(maintenance)        75 percent of the average  2005 sign-up, existing     
payments             county costs of the        practice payments were set 
                        practices for the 2001     at 25 percent of the       
                        crop year. For a beginning stewardship payment.g      
                        producer, this limit is 90 
                        percent.                   
Limits on new        New practice payments are  New practice payments were 
conservation         limited to 75 percent of   limited to 50 percent of   
practice             the cost of the average    the cost of adopting the   
                        county costs of the        practice during the 2001   
payments             practices for the 2001     crop year. For a beginning 
                        crop year. For a beginning producer, this limit was   
                        producer, this limit is 90 65 percent. In addition,   
                        percent.                   new practice payments were 
                                                   limited to a total of      
                                                   $10,000 over the life of a 
                                                   CSP contract. Furthermore, 
                                                   within each watershed,     
                                                   only designated            
                                                   conservation practices     
                                                   were eligible for new      
                                                   practice payments.         
Limits on            No specific language to    An enhancement payment     
enhancement payments limit enhancement          limit or variable rate may 
                        payments.                  be set for any given       
                                                   sign-up. For the 2005      
                                                   sign-up, annual            
                                                   enhancement payments were  
                                                   limited to $13,750 for     
                                                   Tier I contracts; $21,875  
                                                   for Tier II contracts; and 
                                                   $28,125 for Tier III       
                                                   contracts.                 

Sources: GAO analysis of the farm bill and NRCS's amended interim final
CSP rule, 70 Fed. Reg. 15212 (Mar. 25, 2005) (7 C.F.R. pt. 1469) and 2005
sign-up notice, 70 Fed. Reg. 15277 (Mar. 25, 2005).

aThe nondegradation standard is defined as the level of measures required
to adequately protect and prevent degradation of one or more natural
resources as determined by NRCS in accordance with the quality criteria
described in its handbooks.

bFor Tiers I and II, the minimum level of treatment for soil quality on
cropland is considered achieved when the soil conditioning index is
positive. For Tiers I and II, the minimum level of treatment for water
quality on cropland is considered achieved if the current level of
treatment meets or exceeds NRCS's quality criteria for the specific
resource concerns of nutrients, pesticides, sediment, and salinity for
surface water and nutrients, pesticides, and salinity for groundwater. For
Tiers I and II, the minimum level of treatment on pastureland and
rangeland is vegetation and animal management accomplished by following a
grazing management plan that provides for (1) a forage-animal balance, (2)
proper livestock distribution, (3) timing of use, and (4) managing
livestock access to water courses. To determine that resource concerns
were managed at specified minimum levels of conservation treatment, NRCS
field office staff reviewed information provided by the applicant and
verified the accuracy of this information through interviewing the
applicant and, in some cases, performing field checks.

cA resource management system is a system of conservation practices and
management relating to land or water use that is designed to prevent
resource degradation and permit sustained use of land, water, and other
resources, as defined in accordance with the NRCS technical guide.

dThe minimum level of treatment for Tier III is having a fully implemented
resource management system that meets the quality criteria for the local
NRCS field office technical guide for all applicable resource concerns and
considerations with the following exceptions: (1) the minimum requirement
for soil quality on cropland is considered achieved when the soil
conditioning index is positive, (2) the minimum requirement for water
quantity and irrigation water management on cropland or pastureland is
considered achieved when the current level of management for the system
results in a water use index value of at least 50, and (3) the minimum
requirement for wildlife is considered achieved when the current level of
treatment and management for the system results in an index value of at
least 0.5 using a general or species specific habitat assessment guide. In
addition, for Tier III, all riparian corridors, including streams and
natural drainages, within the agricultural operation must be buffered to
restore, protect, or enhance riparian resources. As appropriate, riparian
corridors must be managed or designed to intercept sediment, nutrients,
pesticides, and other materials in surface runoff; reduce nutrients and
other pollutants in shallow subsurface water flow; lower water
temperature; and provide litter fall or structural components for habitat
complexity or to slow out-of-bank floods.

eThe farm bill provides that "[i]n entering into conservation security
contracts with producers...the Secretary shall not use competitive bidding
or any similar procedure." Some stakeholders view NRCS's use of enrollment
categories as being inconsistent with this statutory language. However,
NRCS has stated that it is not implementing a competitive process but is
merely implementing the statutory scheme of providing payments for those
applicants meeting specified criteria, so as to stay within the budgetary
and technical assistance limits.

fPlacement of applications into the five enrollment categories was based
on the conservation treatment in place for at least 2 years, as well as
soil conditioning index levels. If all the applications in an enrollment
category could not be funded, the applications were funded based on
subcategories. In the fiscal year 2005 sign-up, placement in these
subcategories was based on various factors such as whether the applicant
was a limited resource producer.

gAccording to an NRCS official, NRCS generally lacks data on the cost of
maintaining conservation practices in the 2001 crop year. As a result,
NRCS calculates existing practice payments based on 25 percent of the
stewardship payment amount. According to another NRCS official, this
alternative results in lower payments. In addition, NRCS stipulates in its
regulation that existing practice payments may be based on a percentage of
the stewardship payment if this payment does not exceed 75 percent of the
average 2001 county cost of installing the conservation practice.

Some Fiscal Year 2004 CSP Contract Payments Exceeded Farm Bill Payment
Limits

Some fiscal year 2004 CSP contract payments exceeded applicable payment
limits established in the farm bill. As discussed, the farm bill limited
annual contract payments to an individual or entity to $20,000 for Tier I;
$35,000 for Tier II; and $45,000 for Tier III. However, we found that 409
(19 percent) of the 2,180 fiscal year 2004 CSP contract payments exceeded
these limits. Specifically, 95 (12 percent) of Tier I payments exceeded
$20,000; 209 (24 percent) of Tier II payments exceeded $35,000; and 105
(21 percent) of Tier III payments exceeded $45,000. (Tables 12, 13, and 14
in app. II show the distribution of fiscal year 2004 contract payments for
Tiers I, II, and III, respectively.)

According to NRCS officials, these contract payments exceeded the
statutory limits because they included an "advance" enhancement payment
component. These officials noted that NRCS did not intend for this advance
component to be included in the annual contract payment limit because it
was a one-time payment. Furthermore, they said that any producer who
received an advance enhancement payment would have that payment (generally
limited to $10,000) offset through deductions over the remaining years of
that producer's CSP contract. For example, for a producer whose contract
had 9 remaining years, NRCS would deduct one-ninth of the advance
enhancement payment in each of these years. Thus, over the life of a
contract, no producer would receive more than the maximum total possible
payment (e.g., $450,000 over 10 years for a Tier III contract). NRCS
officials explained that for the fiscal year 2004 CSP sign-up, NRCS, using
its borrowing authority, obtained the maximum amount of funding available,
or $41.443 million. However, because of lower than anticipated producer
participation in CSP that year, NRCS did not need all of this money to
make annual contract payments to producers. NRCS decided to use the
remaining amounts-about $13.6 million-to make a one-time advance
enhancement payment to most (2,070 of 2,180) of the producers enrolled in
CSP that year.44 In addition, according to NRCS officials, in subsequent
years, the offsetting deductions made for these fiscal year 2004 advance
enhancement payments would result in more funding being available for new
CSP contracts.

We plan to pursue with USDA's Office of General Counsel the availability
of remaining CSP funds for advance enhancement payments that, when
included with annual contract payments, exceed the statutory payment
limits.

Although NRCS Has Established Internal Controls, Weaknesses in These
Controls Increase the Risk of Improper Payments

In addition to the cost control measures in the farm bill and CSP
regulations, USDA and NRCS have established internal controls that help to
ensure the accuracy and appropriateness of payments made through
agricultural conservation programs, including CSP. These controls, also
referred to as management controls, include the organizational policies
and procedures used to reasonably ensure that (1) programs achieve their
intended results; (2) resources are used consistent with agency and
departmental missions; (3) programs and resources are protected from
waste, fraud, and mismanagement; (4) laws and regulations are followed;
and (5) reliable and timely information is obtained, maintained, reported,
and used for decision-making.45 (More specific information on USDA and
NRCS internal controls is presented in app. VII.) However, recent reviews
of these internal controls done by NRCS's Oversight and Evaluation (O&E)
Staff and the USDA Inspector General raise concerns regarding the adequacy
of some of these controls to preclude improper payments being made under
CSP.

Although NRCS has established internal control guidance for CSP,
implementation of these controls has sometimes been criticized. For
example, in reviews it conducted in 2005, NRCS's O&E staff found problems
with several aspects of the agency's implementation of CSP, including its
implementation of some internal controls. (We examined draft reports
related to these reviews in January 2006; NRCS considers the information
contained in these drafts to be predecisional and subject to change
pending management review and the agency's preparation of management
action plans describing its response to the reports' recommendations.) In
assessing internal controls, the O&E staff conducted work at NRCS field
offices located in 18 watersheds (in 13 states) that were eligible for
either the fiscal year 2004 or fiscal year 2005 CSP sign-up. Among other
things, the staff found weaknesses in quality assurance and case file
documentation. For example, the staff found that 12 of 13 NRCS state-level
Quality Assurance Plans reviewed did not include specific CSP components
such as those related to conservation planning and application, that
NRCS's Conservation Programs Manual (sec. 518.75 (b)) states must be
included. In addition, the staff found that 33 of 55 fiscal year 2004 CSP
contracts studied had not had a contract review. The Conservation Programs
Manual (sec. 518.101) provides that "the designated [NRCS] conservationist
will review the contract annually and document that the provisions of the
contract are followed." According to the O&E staff, the absence of a
contract review could result in payments being made for enhancements that
are not being done or not yet completed as scheduled in the producer's
conservation security plan.

Regarding case file documentation, the O&E staff found that many
conservation stewardship plans were missing components. For example, most
plans included components such as maps and map attribute information, but
information needed to evaluate the effectiveness of a plan in achieving
its environmental objectives was either missing or incomplete in up to 60
percent of the plans. The preparation of conservation stewardship plans is
required by the farm bill and, according to the Conservation Programs
Manual (sec. 518.70), this plan "is the basis for a conservation
stewardship contract." In general, a plan identifies the objectives for
the associated contract, the time frames for implementing new practices,
enhancements that will impact payment levels over the life of the
contract, and additional measures needed to move to a higher tier level.
In light of these findings, O&E staff offered several tentative
recommendations related to revising NRCS's written guidance documents,
developing a checklist for staff to use in compiling conservation
stewardship plans, improving management oversight, and providing staff
further training.

In addition, other aspects of NRCS's internal controls have been
criticized. For example, in January 2005, the USDA Inspector General
reported that (1) NRCS had neither identified the internal control
measures in place to preclude, or detect in a timely manner, improper
payments for the programs it administers, including CSP, nor did it know
if the controls were in operation and (2) NRCS had not conducted risk
assessments of potential improper payments for these programs. In
addition, USDA reported several material weaknesses to its financial and
accounting systems and information security program in its fiscal year
2005 Performance and Accountability Report. See appendix VII for further
discussion of these matters.

In its planning documents, NRCS notes that the nation made a massive
financial commitment to conservation in the 2002 farm bill and thus NRCS
must manage the taxpayers' money well, including documenting how these
funds have been spent. Among other things, the agency said it would
develop processes to better record obligations and improve the accuracy
and timeliness of its financial information. However, until actions are
completed to correct these internal control problems, NRCS cannot be
certain that contract payments information for CSP and other programs is
accurate. This increases the potential for improper payments being made
under these programs.

Inconsistencies in State Office Determinations of Producer Eligibility for
CSP Payments May Undermine NRCS Cost Controls and the Achievement of CSP's
Intended Wildlife Habitat Benefits

NRCS's efforts to control program spending may be weakened by
inconsistencies in NRCS state offices' determinations of producer
eligibility for the three CSP payment tiers. Several NRCS state officials
expressed concerns about such inconsistencies, suggesting that some state
offices may have been more lenient than their own state in determining
producers' eligibility for CSP payments. In particular, several NRCS state
officials had specific concerns about inconsistencies in the wildlife
habitat assessment criteria that NRCS state offices use, in part, to
determine applicant eligibility for Tier III, the highest CSP payment
level.46 The farm bill requires a producer to meet minimum standards for
all applicable resource concerns on the entire agricultural operation,
which would include wildlife habitat, to be eligible for Tier III
payments.47

For the fiscal year 2004 CSP sign-up, NRCS provided limited guidance to
its state offices that were responsible for developing the assessment
criteria that were used to determine whether a producer met minimum
standards for protecting wildlife habitat. However, a post-sign-up
debriefing of NRCS headquarters and state officials to identify lessons
learned indicated that the state offices developed assessment criteria
that were extremely variable, contributing to significant differences in
the rate of CSP participation and payments at the Tier III level among the
various

watersheds included in the sign-up.48 According to documentation based on
this debriefing, this variability in assessment criteria was attributed to
(1) differences in the type of assessment criteria used (i.e., some states
used targeted species assessment criteria while others used general
wildlife assessment criteria) and (2) differences among the states'
general wildlife assessment criteria. Table 5 shows the Tier III
participation and payment rates for each of these watersheds.

Table 5: Tier III Contracts and Payments by Watershed, Fiscal Year 2004

Watershed/lead  Tier III     Total Percentage    Tier III       Total Percentage 
NRCS state     contracts contracts   of total    contract    payments   of total 
office                              contracts    payments               payments 
                                      in Tier                           for Tier 
                                          III                                III 
                                                                       contracts 
Auglaize              66       189        35%    $982,117  $2,831,953        35% 
                                                                      
Ohio                                                                  
Blue Earth             9       280          3     183,424   3,242,507          6 
                                                                      
Minnesota                                                             
East                   8       145          6      86,356   1,129,248          8 
Nishnabotna                                                           
                                                                      
Iowa                                                                  
Hondo                  8        16         50      61,205      71,766         85 
                                                                      
Texas                                                                 
Kishwaukee            16       191          8     304,386   4,828,559          6 
                                                                      
Illinois                                                              
Lemhi                 10        18         56     289,917     379,555         76 
                                                                      
Idaho                                                                 
Little                 0        37          0           0     949,539          0 
                                                                      
Georgia                                                               
Little River          12       189          6     311,548   4,424,805          7 
Ditches                                                               
                                                                      
Missouri                                                              
Lower Chippewa        50       207         24     836,637   2,056,147         41 
                                                                      
Wisconsin                                                             
Lower Little          18       143         13     342,893   1,204,849         28 
Blue                                                                  
                                                                      
Kansas                                                                
Lower Salt            57       176         32     552,618   1,305,590         42 
Fork Arkansas                                                         
                                                                      
Oklahoma                                                              
Lower                 13        49         27     327,821     874,217         37 
Yellowstone                                                           
                                                                      
Montana                                                               
Moses Coulee           4        43          9      92,563     826,985         11 
                                                                      
Washington                                                            
Punta de Agua         15        19         79     584,594     626,491         93 
                                                                      
New Mexico                                                            
Raystown              14        36         39      82,556     145,831         57 
                                                                      
Pennsylvania                                                          
Saluda                 1        76          1         272     138,619        < 1 
                                                                      
South Carolina                                                        
St. Joseph           125       217         58   3,122,554   4,183,158         75 
                                                                      
Indiana                                                               
Umatilla              83       149         56   3,860,988   5,237,575         74 
                                                                      
Oregon                                                                
Total                509     2,180        23% $12,022,446 $34,457,394        35% 

Source: GAO analysis of NRCS data (as of July 27, 2005).

As shown in the table, the percentage of total contracts in Tier III
varied from a low of 0 in one watershed to a high of 79 percent in another
watershed. Part of this variation may be attributed to differences in land
uses among watersheds. For example, land that is in an intensive
agricultural use, such as cropland, tends to be less suitable as wildlife
habitat than land that is not used intensively such as rangeland. However,
even among watersheds in which CSP enrollments were over 90 percent
cropland-Auglaize, Blue Earth, East Nishnabotna, Kishwaukee, Little,
Little River Ditches, Lower Chippewa, Raystown, and St. Joseph-the
percentage of total contracts in Tier III varied from 0 to 58 percent, and
the percentage of payments going to Tier III contracts ranged from 0 to 75
percent.

In response to the variation in wildlife habitat assessment criteria used
during the fiscal year 2004 sign-up and related differences in Tier III
participation, NRCS's Wildlife Team, responsible for technical matters
concerning wildlife habitat under CSP, developed national guidance that
NRCS state offices were to follow in creating their criteria for
subsequent sign-ups. The national guidance was provided to state office
staff during training sessions held before the fiscal year 2005 CSP
sign-up.

The Wildlife Team developed the national guidance based on NRCS's CSP
regulations that state that the minimum requirement for wildlife habitat
is considered achieved when a producer's level of treatment and management
results in an index value of at least 0.5 based on a general or
species-specific habitat assessment guide. A Wildlife Team official said
this 0.5 index value corresponds to 50 percent of the potential habitat
for a given land area49 and stated that the national guidance was
developed accordingly. He noted that, because habitat needs differ across
the nation, it is not possible to develop one set of criteria that would
work for the whole country and apply to all situations. Because of these
differences, the national guidance instructs each state to define its own
minimum criteria for each of the listed wildlife resource components in
the national guidance

based upon the state's own unique set of conditions.50 For example, for
rangeland, the national guidance identifies vegetative height management
during nesting season as a component that must be addressed and instructs
state offices to define the minimum foliage height of grasses. Despite
this flexibility, the official said that the purpose of this national
guidance was to avoid the wide variations in criteria that led to large
discrepancies and inconsistencies in the fiscal year 2004 sign-up.

According to the national guidance, NRCS state offices' general wildlife
habitat assessment criteria for cropland must address the following six
wildlife resource components:51

o Amount of noncrop vegetative cover. These areas include woodlots,
windbreaks, field corners, hedgerows, grassed areas, wetlands, or riparian
areas managed for wildlife. According to the guidance, state offices must
define a minimum percentage of noncrop vegetative cover within or adjacent
to offered cropland fields.52 A state office's criteria for this component
must be met for each cropland field.53

o Size of noncrop vegetative cover. State offices must define a minimum
dimension for these areas. According to a Wildlife Team official, an
example is a minimum width.

o Interspersion of noncrop vegetative cover.54 State offices must define a
minimum distance from all parts of cropland fields to noncrop vegetative
cover.

o Condition of noncrop vegetative cover. Minimum standards for the
composition and structure of the noncrop vegetative cover must be defined.
Examples include minimum plant heights and restrictions on mowing.

o Conditions for lakes, ponds, wetlands, and streams. Minimum conditions,
such as buffer widths, must be defined

o Crop residue management. Minimum levels of crop residue must be
defined.55

According to Wildlife Team officials, the national guidance instructed
each NRCS state office to develop wildlife habitat assessment criteria
that consisted of questions corresponding to the wildlife resource
components in the national guidance. For each component of the national
guidance, these officials said these questions were to include specific
criteria established by the state offices and were intended to determine
if a CSP applicant was meeting these criteria and thus was addressing the
wildlife habitat resource concern. In general, the phrasing and number of
questions that state offices included in these assessment criteria, as
well as the overall design of the assessment criteria, varied. For
example, one state office's assessment criteria had nine questions and
required a "yes" response to each question. Another state office's
assessment criteria included six questions and required a "yes" response
to each question.

In reviewing the wildlife habitat assessment criteria that NRCS state
offices used in the fiscal year 2005 sign-up, we found that some NRCS
state offices used criteria that were inconsistent with the national
guidance. For example, the design of the assessment criteria used for
cropland in three states made it possible for NRCS to determine that a
producer was addressing the wildlife habitat resource concern even though
that producer may not have met the state criteria for each of the six
resource components identified in the national guidance. Although these
three state offices' wildlife habitat assessment criteria included a
question or questions that generally related to each of the national
guidance's components, the state offices required "yes" responses to only
five of the seven questions listed in the assessment criteria. Thus, in
effect, these states did not require producer compliance with all aspects
of their state criteria or, by extension, all six components of the
national guidance. A Wildlife Team official explained that although NRCS
has not undertaken a review to determine whether producers have qualified
for Tier III payments under this scenario, based on informal discussions
with field office staff, this official concluded that some producers
received such payments during the fiscal years 2004 and 2005 sign-ups.56
In addition, another Wildlife Team official said it was particularly
problematic that a producer could receive a Tier III payment in these
states without meeting the state criteria related to the amount of noncrop
vegetative cover.57 According to this official, this component of the
national guidance is particularly important for cropland because it is
intensively farmed and generally unsuitable for wildlife habitat. Thus,
the creation or preservation of areas of noncrop vegetative cover
associated with cropland is critical to providing adequate wildlife
habitat.

As a result of these inconsistencies with the national guidance, producers
in these states could qualify for Tier III payments even though they might
not be providing habitat as intended by the national guidance and might
not have qualified for Tier III payments in another state that used
criteria that more closely followed the national guidance. In addition,
the use of criteria that are inconsistent with the national guidance
reduces NRCS's ability to ensure that CSP is achieving its intended
wildlife habitat benefits. If producers are not providing the wildlife
habitat benefits intended by the national guidance, the environmental
benefit achieved per dollar of CSP

spending may be reduced,58 and CSP cost control measures would be
weakened. Furthermore, some NRCS state officials said such variability in
state assessment criteria could lead to pressures for more lenient payment
eligibility determinations within their own states. According to these
officials, when producers in a state that is conforming to the national
wildlife habitat guidance see that other states are using more lenient
criteria, they may pressure their NRCS state office to adopt more lenient
criteria as well.

NRCS Wildlife Team officials agreed with our assessment that some NRCS
state offices used wildlife habitat assessment criteria for the fiscal
year 2005 sign-up that were not consistent with the national guidance. In
addition, these officials said that NRCS should conduct field tests of
states' criteria to ensure that these criteria are consistent with the
national guidance and to determine the extent to which Tier III contracts
provide adequate wildlife habitat benefits. However, they cited time
constraints as the primary reason that states' criteria have not been
field tested and they indicated, as of February 2006, that NRCS does not
have plans to do this testing. Regarding reasons why some state offices
have not developed criteria consistent with the national guidance, these
officials noted that some state office officials hold the view that CSP is
a working lands program and, therefore, should not place too much emphasis
on wildlife habitat or force a producer to take land out of production in
order to create the habitat needed to qualify for a Tier III payment. Some
of the state officials we contacted corroborated this point. In addition,
the Wildlife Team officials noted that some state office officials might
not have understood what guidance they were supposed to follow during the
fiscal year 2005 sign-up because NRCS's Conservation Programs Manual-the
principal source of guidance for NRCS field office staff for implementing
conservation programs-had no explicit reference to the national guidance.
Accordingly, the Wildlife Team officials said they had recommended to
NRCS's programs office that a reference to the national

guidance be included in the manual. They opined that inclusion of this
reference would emphasize the importance of the national guidance to the
agency's field staff.

Finally, some NRCS state officials also expressed concerns about other
inconsistencies among state offices in determining producer eligibility
for certain CSP payments. In particular, they cited inconsistencies in
states' determinations that producers are sufficiently addressing water
quality issues. According to NRCS officials, the agency has been aware of
this issue since the fiscal year 2004 sign-up when it relied on
state-based standards to determine if CSP applicants were meeting
eligibility requirements for water quality concerns. In the 2005 sign-up,
to increase consistency, NRCS required its state offices to develop water
quality checklists based on national criteria to assess applicant
eligibility regarding water quality issues. These checklists were to
address all critical water quality concerns, including those related to
nutrients, pesticides, and sediment. In the 2006 sign-up, to further
increase consistency, NRCS developed a national water quality eligibility
"tool" that uses indices and scales to achieve an overall water quality
assessment rating for each applicant. Using the tool, NRCS assigns points
for an applicant's current conservation activities and the level of water
quality protection those activities provide.

Despite Legislative and Regulatory Measures That Lessen Possible
Duplication between CSP and Other Programs, the Potential for Duplicate
Payments Still Exists, and Such Payments Have Occurred

The farm bill and CSP regulations include various measures that reduce the
potential for duplication between CSP and other USDA conservation
programs. For example, as authorized in the statute, CSP can reward
producers for conservation actions that they have already taken, whereas
other programs generally provide assistance to producers to encourage them
to take new actions intended to address conservation problems on working
lands or to idle or retire environmentally sensitive land from production.
In addition, USDA regulations establish higher minimum eligibility
standards for CSP than exist for other programs, helping to differentiate
the applicant pool for CSP from these programs. However, the possibility
remains that producers could receive duplicate payments for the same
conservation action from CSP and other programs, and such duplication has
occurred. In addition, NRCS does not have a comprehensive process to
preclude or identify such duplicate payments.

Farm Bill Provisions Lessen the Potential for Duplication

CSP operates under a number of statutory provisions that distinguish it
from other USDA conservation programs and make duplicate payments less
likely. Specifically, the farm bill

o explicitly prohibits duplicate payments under CSP and other conservation
programs for the same practices on the same land.

o provides incentives to producers, through CSP's Tier III payments, to
address all applicable resource concerns on entire agricultural operations
(i.e., whole-farm planning).

o provides that CSP may reward producers for maintaining conservation
practices that they have already undertaken, whereas other programs
generally provide assistance to encourage producers to take new actions to
address conservation problems on working lands or to idle or retire
environmentally sensitive land from agricultural production.

o establishes several types of CSP payments-stewardship, existing
practice, and enhancement payments-that are unique to CSP and not offered
under other programs.59

In addition, other farm bill provisions reduce potential duplication by
prohibiting certain payments from being made through CSP.60 For example,
CSP payments cannot be made for

o construction or maintenance of animal waste storage or treatment
facilities or associated waste transport or transfer devices for animal
feeding operations.61

o conservation activities on lands enrolled in the Conservation Reserve
Program, the Wetlands Reserve Program, and the Grassland Reserve Program.

Furthermore, if a producer receives payments under another program-such as
a commodity price support program-that are contingent on the producer's
compliance with requirements for the protection of highly erodible land
and wetlands, the farm bill only authorizes a CSP payment on that land for
practices that exceed those requirements.62

NRCS Regulatory Measures and Procedures Further Distinguish CSP from Other
Programs

In addition to farm bill provisions that reduce potential duplication, a
number of NRCS regulatory measures and procedures further distinguish CSP
from other USDA conservation programs. These include the following:

o NRCS's CSP regulations and Conservation Programs Manual elaborate on
statutory provisions that prevent producers from receiving payments under
CSP for the same practice on the same land. For example, the manual states
that a CSP participant may not receive CSP cost-share funding for new
conservation practices that were applied with financial assistance from
other USDA conservation programs. In addition, the manual states that a
participant may not receive a CSP payment for enhancement activities if
the participant is also earning financial assistance payments through
other programs for the same conservation practice or action on the same
land during the same year.

o CSP regulations establish higher minimum eligibility standards for CSP
than exist for other programs, helping to differentiate the applicant pool
for CSP from the potential applicants for other programs. For example, to
be eligible for a Tier I CSP contract, a producer must already have
addressed water and soil quality to a minimum level of treatment. NRCS
encourages producers who do not meet these higher standards to apply for
assistance under other programs.

o For the 2005 sign-up, NRCS limited CSP cost-share payments for new
conservation practices to 50 percent (65 percent for beginning and
limited-resource producers) of implementation costs. NRCS allows
cost-share payments of up to 75 percent under the Environmental Quality
Incentives Program (EQIP) and the Wildlife Habitat Incentives Program
(WHIP).63 Thus, producers have a stronger financial incentive to apply for
new conservation practice payments through EQIP or WHIP rather than CSP.
In addition, NRCS has limited the number of conservation practices that
are eligible for funding through CSP. In any given watershed, CSP payments
for new conservation practices were only offered for up to about 20 of the
approximately 200 conservation practices that can be funded through EQIP.

o  NRCS has encouraged enhancement payments for conservation actions that
exceed the minimum treatment standards required for CSP eligibility.
According to NRCS officials, emphasizing enhancements helps to
differentiate CSP from other programs, such as EQIP and WHIP, which do not
offer similar payments. As discussed, EQIP and WHIP payments generally
assist producers in achieving a level of treatment that meets the minimum
or nondegradation standard for a conservation activity,64 as defined by
NRCS, which generally is less than the minimum treatment standard for CSP
enhancements. Most CSP payments made in fiscal years 2004 and 2005 were
for enhancements. In fiscal year 2004, enhancement payments and advance
enhancement payments accounted for about 81 percent of total CSP
payments.65 In fiscal year 2005, enhancement payments were 81 percent of
total CSP payments.

o CSP regulations and procedures also provide financial incentives for
enhancements. Specifically, in order to receive a larger payment up to the
full total payment allowed under each enrollment tier, a producer must
agree to implement enhancements because of the limits on stewardship,
existing practice, and new practice payments. Stewardship payments are
capped under the farm bill and CSP regulations at $5,000 for Tier I,
$10,500 for Tier II, and $13,500 for Tier III.66 Furthermore, CSP sign-up
notices have limited existing practice payments to a flat rate of 25
percent of the stewardship payment for each tier and have limited new
practice payments to $10,000 for each tier. As a result of these limits,
the maximum total payment a producer could receive (i.e., the total of the
stewardship, existing practice, and new practice payments) without an
enhancement payment would be $16,250 for Tier I, $23,125 for Tier II, and
$26,875 for Tier III. Therefore, in order to receive the full amount of
CSP financial assistance available for an enrollment tier (e.g., $20,000
for Tier I; $35,000 for Tier II; and $45,000 for Tier III), the producer
must agree to implement enhancements. In addition, to encourage
participants to add new enhancements over the life of a contract, NRCS
incorporated variable enhancement payments into the fiscal year 2005 CSP
contracts that gradually reduce the annual payments for a contract's base
(initial) enhancements over the contract's term.67 Thus, to compensate for
this diminishing income, a producer would need to add new enhancements
over the life of a contract.

Potential for Duplication Still Exists and Duplicate Payments Have
Occurred

Despite farm bill and NRCS regulatory measures and procedures that lessen
possible duplication between CSP and other programs, the potential for
duplication still exists and has occurred with regard to CSP enhancement
payments. For example, although some payments made through CSP are unique
to that program, payments for new conservation practices or actions such
as nutrient management can be made through CSP and other programs,
creating the potential for duplicate payments. In addition, CSP payments
for enhancement actions have the potential to overlap with payments under
other programs for conservation practices. Regarding the latter
possibility, we found a number of cases where duplicate payments had been
made for CSP enhancements and conservation practices under other programs
for the same conservation action on the same land during the same year. In
addition, NRCS lacks a comprehensive process to identify potential
duplicate payments or duplicate payments already made.

Table 6 summarizes the types of conservation payments available through
CSP, EQIP, and WHIP.

Table 6: Conservation Payments Available through CSP, EQIP, and WHIP

Payment type                                                 CSP EQIP WHIP 
Stewardship payment to reward prior conservation actions      X       
Existing practices payment for the cost of maintaining        X       
previously implemented conservation practices                         
Cost-share payment for the adoption of conservation           X   X    X   
practices that meet nondegradation standards; these                   
conservation practices include land management practices              
(e.g., nutrient management to reduce water pollution);                
vegetative practices (e.g., planting native grasses to                
provide wildlife habitat); and structural practices (e.g.,            
fencing to keep livestock out of streams)                             
Incentive payment for the adoption of land management             X   
conservation practices that meet nondegradation standards             
(e.g., crop residue management to reduce soil erosion)                
Enhancement payment for conservation actions that exceed      X       
minimum eligibility standards (e.g., delaying haying and              
grazing pasture or grassland from April 15 to August 1 to             
improve habitat for ground-nesting birds that reproduce               
during this period)a                                                  

Sources: GAO analysis of CSP, EQIP, and WHIP provisions.

aThe farm bill states that these enhancement payments are for conservation
practices that exceed the minimum requirements for the applicable tier of
CSP participation. Under these minimum requirements, the level of
conservation treatment must meet nondegradation standards for the
applicable resource concerns. In implementing CSP, NRCS has made
enhancement payments available for soil, nutrient, wildlife habitat, pest,
energy, air, irrigation water, and grazing management, as well as locally
identified conservation needs.

As indicated in the table, the farm bill allows cost-share payments for
the adoption of conservation practices that could be implemented through
any of these programs,68 creating the possibility that a producer could
receive duplicate payments for the same conservation practice under CSP
and another program. In reviewing fiscal year 2004 contracts and payments
data for CSP, EQIP, and WHIP, we did not find evidence of duplicate
payments related to funding the adoption of the same conservation practice
under CSP and another program on the same operation during the same year.
However, the opportunity for such duplicate payments to have been made
during fiscal year 2004 was very low because only four producers received
CSP payments for the adoption of new conservation practices that year.
NRCS officials said that, because the fiscal year 2004 contracts were
approved in July 2004, the time remaining in the fiscal year was not
sufficient for most CSP participants to implement new conservation
practices and receive a payment. In addition, these officials said NRCS
encourages producers to use programs other than CSP to obtain financial
assistance for new conservation practices. As discussed, these other
programs generally offer a higher cost share for new practices than
offered under CSP. In the future, greater numbers of producers may receive
CSP payments for new conservation practices, increasing the potential for
duplicate payments.

The potential for duplicate payments also exists between CSP enhancement
payments and conservation practice payments made under other programs.
Each year, NRCS state offices develop lists of conservation actions
eligible for CSP enhancement payments in their states. NRCS headquarters
officials then review and approve the states' lists. If the reviewing
officials find that a proposed enhancement includes conservation actions
that do not exceed the minimum standard for the related conservation
practice, as defined by NRCS, they work with the NRCS state office to
revise the proposed enhancement. However, some overlap may occur because a
given conservation action can have a different purpose under another
program. For example, several states offer CSP enhancement payments for
the use of conservation crop rotation for the purpose of breaking plant
pest cycles to reduce the need for pesticide applications. At the same
time, these states offer EQIP funding for the use of conservation crop
rotation for the purposes of reducing soil erosion, providing wildlife
cover and food, and improving soil organic matter. This overlap increases
the potential for a producer to receive two payments for the same
conservation action on the same land during the same year. The farm bill
prohibits payments under CSP and another conservation program for the same
practice on the same land. The CSP manual elaborates on this provision,
stating that a participant may not receive a CSP payment for enhancement
activities if the participant is also earning financial assistance
payments through other programs for the same practice or activity on the
same land during the same year.69

Our file reviews and analysis of NRCS payments data for calendar year 2004
showed that duplicate payments have occurred. Specifically, we found cases
where a producer received duplicate payments from CSP and EQIP for
performing the same conservation action on the same land during the same
year. For example, in the course of performing limited file reviews at
several NRCS field offices, we found that a producer had received a CSP
enhancement payment and an EQIP conservation practice payment for the same
conservation action-establishing a small grain cover crop-on the same
tract of land during 2004. This producer also was scheduled to receive the
same duplicate payments during 2005.70

Furthermore, our analysis of 2004 payments data for CSP, EQIP, and WHIP
revealed other cases in which a producer received a CSP enhancement
payment and an EQIP payment for performing a similar conservation action
during the same year. Our analysis of these data showed that 172 (or 8
percent) of the 2,180 producers who received a CSP payment in 2004 also
received an EQIP payment that year as well. None of these 2,180 producers
received a WHIP payment that year.71 In analyzing the conservation actions
funded for the 172 producers who received both CSP and EQIP payments, we
initially identified 72 producers who received payments that appeared to
be for similar or related conservation actions and may have been
duplicates. Specifically, in aggregate, these producers received a total
of 121 payments under each program that were potentially duplicates. We
then selected 11 of these producers, who in aggregate received a total of
12

payments under each program, for more detailed analysis.72 We discussed
these 12 cases with NRCS field office officials to determine if any of
these payments were made for implementing the same conservation action on
the same land. In 6 of the 12 cases, a producer received a CSP enhancement
payment and an EQIP payment for conservation actions that appeared to be
similar (e.g., CSP and EQIP payments for nutrient management). In the
other 6 cases, a producer received a CSP enhancement payment based on an
index score that may have increased as a result of a conservation action
for which the producer received an EQIP payment.

We discussed the first 6 cases-those in which a producer received a CSP
enhancement payment for a conservation action and an EQIP payment for a
similar conservation action-with NRCS field office officials. Based on
these discussions, we determined that duplicate payments were made in 4 of
these 6 cases. For example, in one instance, a producer received a CSP
pest management enhancement payment of $9,160 for a conservation crop
rotation. On the same parcel of land, the producer also received an EQIP
payment of $795 for the same conservation action-conservation crop
rotation.73 Regarding these 4 cases, in 2 instances, NRCS field office
officials acknowledged that duplicate payments had occurred, i.e., that
the producer received a CSP enhancement payment and an EQIP conservation
practice payment for the same conservation action on the same land during
the same year. In these cases, these officials said the duplicate payments
resulted from simple error. In the other 2 cases, NRCS field office
officials held the view that even though the payments were for the same
conservation action, if they were made for different conservation purposes
(e.g., a CSP-funded conservation crop rotation to break pest cycles and an
EQIP-funded conservation crop rotation to improve soil quality), then they
were not duplicates. However, the farm bill clearly prohibits payments
under CSP and another conservation program for the same practice on the
same land. In addition, NRCS's Conservation Programs Manual elaborates on
this provision, stating that a participant may not receive a CSP payment
for enhancement activities if the participant is also earning financial
assistance payments through other programs for the same practice or
activity on the same land during the same year. NRCS state office and
headquarters officials agreed with our interpretation that in such
situations producers should not receive payments under both programs.

We also discussed the other 6 cases-those in which a producer received a
CSP enhancement payment based on an index score that may have increased as
a result of a conservation action for which the producer received an EQIP
payment in the same year-with NRCS field office officials. In 4 of these
cases, a producer received a CSP soil management enhancement payment based
on a soil conditioning index score while also receiving an EQIP payment
for conservation practices that reduce soil erosion. For each of these
cases, these officials stated that the EQIP-funded conservation practice
had contributed to increasing the soil conditioning index score and, as a
result, had increased the CSP enhancement payment. For example, a producer
may implement an EQIP-funded soil conservation practice that is factored
into the calculation of a soil conditioning index score, increasing the
index score from 0.2 to 0.5. If CSP soil management enhancement payments
in that producer's state increase by $1.16 per acre for each 0.1 increase
in the soil conditioning index, the producer's enhancement payment would
increase by $3.48 per acre.

The NRCS field office officials we interviewed had mixed views as to
whether these payments were duplicates. We believe such payments were, at
least in part, duplicates. However, an NRCS headquarters official stated
that such payments are not duplicates. According to this official, EQIP
payments are intended to compensate producers for "input" costs associated
with installing or initiating conservation actions, while CSP enhancement
payments are intended to reward producers for conservation "outputs"
(i.e., benefits derived from conservation actions). Therefore, the
official said, such payments are not duplicates. We do not agree with this
rationale. Payments for producer "input" costs under EQIP are made because
of their resulting conservation "outputs," and payments for CSP
conservation "outputs" are made to compensate producer "input" costs. In
other words, the programs are both compensating the same action but are
doing so either before or after the fact. To receive payments from both
for the same action would thus clearly be duplication. Moreover, we
continue to consider such payments to be inconsistent with both the farm
bill prohibition and NRCS's guidance on duplicate payments.

In the other 2 cases related to index scores, the producers received CSP
enhancement payments based on a wildlife habitat management index score
while also receiving an EQIP payment for conservation practices that may
improve wildlife habitat. In one of these cases, the EQIP-funded
conservation practice was not taken into consideration in determining the
index score because the practice did not affect habitat for the species of
concern, bobwhite quail. In the other case, an NRCS field office official
stated that, to prevent the payment from being a duplicate, he had not
included the EQIP-funded conservation practice in calculating the index
score. We agreed that duplicate payments had not occurred in these 2
cases.

NRCS headquarters officials stated the agency lacks a comprehensive
process, such as an automated system, to either preclude duplicate
payments or identify them after a contract has been awarded. Instead,
these officials said that NRCS relies on the institutional knowledge of
its field office staff and the records they keep to prevent duplicate
payments. Several NRCS state officials noted that the field staff are
familiar with the assistance that producers in their county receive under
various programs and suggested that these staff would reject a CSP
application for a conservation activity already financed through another
program. However, reliance on the institutional knowledge of staff can be
problematic, especially since NRCS reported in June 2003 that almost 50
percent of its field-level workforce would be eligible to retire in 5
years, representing a serious loss of knowledge, experience, and
institutional memory as these employees are replaced with
less-experienced, newly hired employees.74 In addition, because CSP
sign-ups operate under a compressed time schedule, additional staff-who do
not have knowledge of local producers' prior and current participation in
conservation programs-are often temporarily relocated from other parts of
a state to assist in developing CSP contracts. These staff would not be
familiar with local producers and their history of conservation program
participation.

A number of NRCS officials acknowledged the need for a comprehensive
process to prevent duplicate payments and said NRCS is considering a
modification of CSP contract information stored in the Program Contracts
System (ProTracts), NRCS's contract management information system, that
would allow the agency to identify potential duplicate payments before CSP
contracts are approved. For example, these officials said NRCS is
considering a modification to ProTracts that would flag a planned CSP
enhancement payment that may duplicate a conservation practice payment
made under another program, such as EQIP. However, these officials said
such a modification could require adding more detailed information on
enhancement payments to ProTracts than currently exists within the system.
By the same token, these officials also acknowledged a need to develop a
process to efficiently identify duplicate payments-such as those we
found-already being made under CSP contracts issued in fiscal years 2004
and 2005. At present, NRCS does not know the extent of these duplicate
payments or their aggregate dollar value. Although the total dollar amount
of duplicate payments may be relatively small at present, in the future,
as the program grows to include more participants, the frequency and total
dollar value of duplicate payments could become significant. Furthermore,
since CSP and EQIP offer producers multiple-year contracts, these
duplicate payments, if undetected, would continue in subsequent years. To
the extent that duplicate payments are being made, the effectiveness of
CSP and the other programs involved is undermined and, because of limited
funding, some CSP enrollment categories or subcategories that otherwise
would have been funded may not be funded. As a result, some eligible
producers may not receive CSP payments that they otherwise qualify for and
would have received in the absence of these erroneous payments.

Finally, NRCS has authority to recover duplicate payments. CSP contracts,
by way of reference, include a clause stating that CSP participants cannot
receive duplicate payments. Under a CSP contract, as required in the farm
bill, a producer agrees that on violation of any term or condition of the
contract the producer will refund payments and forfeit all rights to
receive payments or to refund or accept adjustments to payments, depending
on whether the Secretary of Agriculture determines that termination of the
contract is or is not warranted, respectively.

Conclusions

Despite farm bill provisions and NRCS actions to control CSP costs,
inconsistencies in the wildlife habitat assessment criteria used by NRCS
state offices for determining producer payments in the highest CSP payment
category may undermine these cost controls. Specifically, some state
offices have used criteria less stringent than those outlined in the NRCS
national guidance, potentially resulting in Tier III payments to producers
who are not providing the wildlife habitat benefits intended by the
national criteria. Based on NRCS officials' observations and the
weaknesses we found in some state offices' criteria, we believe it is
highly likely that such payments have occurred. Currently, NRCS does not
systematically review and field check its state offices' criteria so that
inconsistencies with the national guidance can be detected and the agency
can determine whether Tier III contracts are providing the wildlife
habitat benefits intended. Furthermore, because there is no reference to
the national guidance in NRCS's Conservation Programs Manual, some NRCS
state and field offices may not know what wildlife habitat assessment
criteria to follow or may fail to appreciate the importance of the
national guidance.

In addition, despite farm bill provisions and NRCS regulations and
procedures designed to prevent CSP from duplicating payments made by other
conservation programs, the potential for duplication still exists, and
duplicate payments for the same practice or activity on the same land have
occurred. Duplicate payments reduce the effectiveness of the programs
involved and, because of limited funding, may result in some producers not
receiving program benefits for which they are otherwise eligible. For
these reasons, NRCS also should use its authority to recover duplicate
payments already made. At present, NRCS lacks a comprehensive process,
such as an automated system, to identify payments that are potential
duplicates before they are made. The agency also lacks an effective way to
identify duplicate payments already made under existing CSP contracts.

Without question, NRCS's challenge in implementing CSP-a new, unique, and
complex conservation program-has been formidable. However, we believe that
factors such as the substantial increase in conservation funding
authorized by the 2002 farm bill; the extent of agriculture's continuing
contribution to impaired soil, water, air, and wildlife habitat; and the
importance of farmers and ranchers as stewards of the nation's natural
resources underscore the need for NRCS to manage CSP in a way that ensures
consistent program implementation nationwide, achieves intended
environmental benefits, and prevents duplicate payments.

Recommendations for Executive Action

To improve NRCS's implementation of the Conservation Security Program, we
recommend that the Secretary of Agriculture direct the Chief of NRCS to
take the following four actions:

o Review and field check each NRCS state office's wildlife habitat
assessment criteria to ensure that states use consistent criteria and
achieve the habitat benefits intended by the national guidance;

o Include a reference to the national guidance for wildlife habitat
assessment criteria in NRCS's Conservation Programs Manual;

o Develop a comprehensive process, such as an automated system, to review
CSP contract applications to ensure that CSP payments, if awarded, would
not duplicate payments made by other USDA conservation programs; and

o Develop a process to efficiently review existing CSP contracts to
identify cases where CSP payments duplicate payments made under other
programs and take action to recover appropriate amounts and to ensure that
these duplicate payments are not repeated in fiscal year 2006 and beyond.

Agency Comments and Our Evaluation

We provided a draft of this report to NRCS for review and comment. We
received written comments from NRCS's Chief, which are reprinted in
appendix VIII. Among other things, NRCS stated that our report provides
valuable information that will help NRCS to improve implementation of CSP.
NRCS also provided us with suggested technical corrections, which we have
incorporated into this report, as appropriate.

NRCS generally agreed with our findings and recommendations and discussed
the actions that it has taken, is taking, or plans to take to address our
recommendations. Regarding our first two recommendations, while
acknowledging that problems exist, NRCS indicated that it recently has
taken or is considering corrective actions other than those suggested in
our recommendations. For example, because some NRCS state offices have not
fully adhered to the agency's national guidance for wildlife habitat
assessment criteria, NRCS said that it issued a national bulletin to all
of its state offices during the fiscal year 2006 CSP sign-up to
reemphasize the guidance that these offices must use in developing their
wildlife habitat assessment criteria. However, while the promulgation of
this bulletin should be helpful, we still believe that NRCS should review
and field check each state office's assessment criteria to ensure its
adherence to the national guidance. In the second case, in lieu of
including a reference in its Conservation Programs Manual, NRCS said that
it is proposing that NRCS wildlife biologists develop a special technical
note that would describe how the national guidance for wildlife habitat
assessment criteria should be used by NRCS state offices. Again, while we
support this step, we still believe that the inclusion of a reference in
the Conservation Programs Manual to the national guidance would help to
emphasize its importance to NRCS state and field-level employees.

Regarding our third recommendation, NRCS indicated that other automation
features will be developed and incorporated into NRCS's contracting
software to avoid duplicate payments. In the meantime, NRCS said that it
had implemented other procedures to help eliminate the occurrence of
duplicate payments. For example, for the fiscal year 2006 sign-up, NRCS is
requiring applicants to complete a form that asks an applicant to certify
whether or not they are receiving payments from another conservation
program on any of the land being offered for enrollment in CSP. In
addition, NRCS said it plans to revise the CSP contract appendix to
include a statement about prohibitions on duplicative payments. Regarding
our fourth recommendation, NRCS said that it has improved management
oversight to cross-check payments made to CSP participants and
participants under other conservation programs to determine if duplicative
payments have been made. If duplicative payments have been made, NRCS said
it has contracting procedures that can be utilized to recover the
payments.

We also provided a draft of this report to CBO and OMB for review and
comment. These agencies provided us with suggested technical corrections,
which we incorporated into the report, as appropriate.

We are sending copies of this report to interested congressional
committees; the Secretary of Agriculture; the Director, CBO; the Director,
OMB; and other interested parties. We also will make copies available to
others upon request. In addition, the report will be available at no
charge on the GAO Web site at h ttp://www.gao.gov.

If you or your staff have any questions about this report, please contact
me at (202) 512-3841 or [email protected] . Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix IX.

Sincerely yours,

Robert A. Robinson Managing Director, Natural Resources     and
Environment

Appendix I

Objectives, Scope, and Methodology

At the request of the Chairman, Senate Committee on Appropriations, we
reviewed issues related to the U.S. Department of Agriculture's (USDA)
implementation of the Conservation Security Program (CSP). Specifically,
we determined (1) why Congressional Budget Office (CBO) and Office of
Management and Budget (OMB) cost estimates for CSP generally increased
over time; (2) what authority USDA has to control CSP costs and what cost
control measures are in place; and (3) what legislative and regulatory
measures exist to prevent duplication between CSP and other USDA
conservation programs, and what duplication, if any, has occurred.

To determine why CSP cost estimates have increased, we interviewed CBO and
OMB officials and reviewed documentation they provided. At each agency, we
spoke with budget analysts about their agency's estimating practices,
including the types of data, assumptions, and models used to prepare cost
estimates. We did not attempt to re-estimate or audit the CBO or OMB
estimates or data discussed in this report. For comparison purposes, we
also interviewed USDA officials, including Natural Resources Conservation
Service (NRCS) and Economic Research Service officials, and reviewed
documentation they provided related to NRCS's benefit-cost assessments of
CSP. NRCS prepared these assessments in conjunction with its issuance of
interim final and amended interim final rules for the program, published
in the Federal Register in June 2004 and March 2005, respectively. In
addition, we interviewed officials at the Congressional Research Service
(CRS) and reviewed documentation they provided, including CRS reports that
discuss CSP cost and implementation issues.

We also sought the views of other interested stakeholder organizations,
such as farm, conservation, and environmental organizations, as to why the
estimated costs of CSP have risen substantially. These organizations
included the American Farm Bureau Federation, the National Association of
Conservation Districts, the Soil and Water Conservation Society, the
Sustainable Agriculture Coalition, the Theodore Roosevelt Conservation
Partnership, the Wildlife Management Institute, Ducks Unlimited, and
Environmental Defense. At each organization, we interviewed knowledgeable
officials and reviewed documentation they provided.

To determine USDA's authority to control CSP costs and the cost control
measures in place, we reviewed relevant authorizing and appropriations
legislation and related legislative history. This legislation includes the
Farm Security and Rural Investment Act of 2002 (the farm bill);1 USDA
appropriations acts for fiscal years 2004, 2005, and 2006;2 and other
legislation that capped CSP funding for the 11-year period, fiscal years
2003 through 2013,3 and for the 10-year period, fiscal years 2005 through
2014.4 In addition, we interviewed USDA officials and reviewed
documentation they provided at NRCS, the Economic Research Service, the
Office of the General Counsel, and the Office of Budget and Program
Analysis. We also reviewed USDA's budget explanatory notes for fiscal
years 2004 through 2007; NRCS's CSP regulations and associated public
comments and benefit-cost assessments; and NRCS's Conservation Programs
Manual and related guidance pertaining to CSP implementation. Furthermore,
we interviewed officials and reviewed documentation they provided at farm,
conservation, and environmental organizations and at CRS.

Concerning cost control measures, we also examined NRCS internal
management controls (internal controls) related to ensuring that CSP cost
control measures are properly and consistently implemented and that CSP
contract payments are accurately determined and tracked.5 In particular,
we focused on controls related to the agency's (1) verification of
producer-reported data used to determine program eligibility and payment
levels; (2) monitoring of producer implementation of CSP contract
provisions; and (3) oversight of program implementation by its field
offices, including oversight of the offices' compliance with legislative
and regulatory program provisions. To do this, we interviewed NRCS
officials and reviewed documentation they provided at the Operations
Management and Oversight Division of the Office of Strategic Planning and
Accountability. This documentation included NRCS's General Manual and
Conservation Programs Manual. It also included an internal draft study
prepared by the division's Oversight and Evaluation Staff regarding CSP's
implementation. Among other things, this draft study discusses internal
controls related to the program's application process, payment tier
designation criteria, and award of contracts across tiers and designated
watersheds. In addition, we reviewed USDA's Management Control Manual and
Management Accountability and Control Regulation. Furthermore, we
reviewed, from USDA, relevant Office of Inspector General reports and the
fiscal year 2005 performance and accountability report; and, from NRCS,
the strategic plan for fiscal years 2003 through 2008; the fiscal year
2003 performance plan;6 performance reports for fiscal years 2003 and
2004; the fiscal year 2004 accomplishments report; and business plans for
fiscal years 2004 and 2005.

Finally, concerning cost controls and related internal controls, we
conducted structured interviews with the relevant NRCS official(s)-usually
the CSP program manager or Assistant State Conservationist in a given NRCS
state office-who had primary responsibility for implementing CSP in each
of the 18 priority watersheds included in the fiscal year 2004 sign-up.7
These 18 watersheds also were among the 220 watersheds included in the
fiscal year 2005 sign-up. For these interviews, we first developed and
pretested a data-collection instrument to guide the interviews.8 In
developing the instrument, we met with officials in NRCS headquarters and
reviewed documentation they provided to gain a thorough understanding of
CSP implementation issues and related internal controls. To pretest the
instrument, we contacted NRCS officials in Indiana and Pennsylvania who
were involved in the fiscal year 2004 sign-up. After conducting the
pretest, we interviewed the respondents to ensure that (1) the questions
were clear and unambiguous, (2) the terms we used were precise, (3) the
questions asked were independent and unbiased, and (4) answering the
questions did not place an undue burden on the agency officials
interviewed. On the basis of feedback from the pretests, we modified the
questions as appropriate. We then conducted the structured interview by
phone with NRCS officials representing each of the 18 watersheds. Table 7
lists the 18 watersheds included in the fiscal year 2004 sign-up, the lead
NRCS state office for each watershed, and the number of CSP contracts
awarded in each watershed.

Table 7: Priority Watersheds, Lead NRCS State Offices, and CSP Contracts
Awarded in the Fiscal Year 2004 CSP Sign-up

Priority watershed         Lead NRCS state office    CSP contracts awarded 
Auglaize                   Ohio                                        189 
Blue Earth                 Minnesota                                   280 
East Nishnabotna           Iowa                                        145 
Hondo                      Texas                                        16 
Kishwaukee                 Illinois                                    191 
Lemhi                      Idaho                                        18 
Little                     Georgia                                      37 
Little River Ditches       Missouri                                    189 
Lower Chippewa             Wisconsin                                   207 
Lower Little Blue          Kansas                                      143 
Lower Salt Fork Arkansas   Oklahoma                                    176 
Lower Yellowstone          Montana                                      49 
Moses Coulee               Washington                                   43 
Punta de Agua              New Mexico                                   19 
Raystown                   Pennsylvania                                 36 
Saluda                     South Carolina                               76 
St. Joseph                 Indiana                                     217 
Umatilla                   Oregon                                      149 
Total                                                                2,180 

Source: GAO analysis of NRCS data (as of July 27, 2005).

We did not conduct structured interviews with officials representing the
lead offices for all 220 priority watersheds included in the fiscal year
2005 sign-up because (1) time frames for completing this sign-up and
awarding contracts fell beyond the time frames for completing this portion
of our work and (2) the 18 watersheds covered by our interviews were
included in both the fiscal year 2004 and fiscal year 2005 sign-ups and
provided wide geographic coverage.

To determine what legislative and regulatory measures exist to prevent
duplication between CSP and other programs and what duplication, if any,
has occurred, we reviewed relevant authorizing legislation and program
regulations and interviewed USDA officials and reviewed documentation they
provided at NRCS, the Economic Research Service, the Office of the General
Counsel, and the Office of the Inspector General. We also included
questions in our structured interviews regarding potential duplication
between CSP and other programs. In addition, we interviewed NRCS officials
responsible for developing a plan to coordinate USDA's land retirement and
agricultural working land conservation programs to achieve the goals of
(1) eliminating redundancy, (2) streamlining program delivery, and (3)
improving services provided to agricultural producers. As required in the
farm bill, USDA was to have submitted a report by December 31, 2005, to
the Senate Committee on Agriculture, Nutrition, and Forestry and the House
Committee on Agriculture that describes this plan and the means by which
USDA will achieve these goals. As of March 2006, USDA was still preparing
this report (USDA officials indicated that the plan and report will be
one-in-the-same document).

Furthermore, to identify potential duplication, we visited and conducted
file reviews at NRCS field offices in two of the watersheds-Lower Chippewa
and St. Joseph-that were included in the fiscal year 2004 and fiscal year
2005 sign-ups. We selected these watersheds based on several factors,
including (1) their similarity to most of the other 18 watersheds included
in both sign-ups in terms of the predominant type of land use (i.e.,
cropland), (2) the relatively high number of financial assistance
contracts provided to producers in these watersheds under CSP and other
USDA conservation programs, and (3) the availability of NRCS field staff
to meet with us at the time. In addition, our selection of watersheds
reflected a wide variation in the percent of total payments made to
producers in each watershed under Tier III, the highest CSP payment
category-41 percent in Lower Chippewa versus 75 percent in St. Joseph.
Finally, the Lower Chippewa watershed lies entirely within the state of
Wisconsin; in contrast, the St. Joseph watershed straddles three
states-Indiana, Michigan, and Ohio-and thus multiple NRCS state offices
were involved in implementing CSP in this watershed (Indiana was the lead
office). In each watershed, we visited two NRCS county offices to review
the contract files of producers who received a CSP payment in fiscal 2004
and an Environmental Quality Incentives Program (EQIP) payment or a
Wildlife Habitat Incentives Program (WHIP) payment in one or more years
during fiscal years 2002 through 2004.9 We chose the offices visited
because they had made relatively large numbers of payments under these
programs.

We also obtained and analyzed data from NRCS's Program Contracts System
(ProTracts) electronic database regarding calendar year 2004 payments made
under CSP and two other USDA conservation programs-EQIP and WHIP. In
particular, we compared payment information for CSP and EQIP to identify
producers who received payments under both programs that year. We then did
further analysis to determine cases in which it appeared a producer had
received payments under both programs for the same conservation practice
or activity, on the same land, in the same year. We discussed payments
received by 11 producers with NRCS officials to determine the actual
extent of duplication, if any. We selected these 11 producers from a cross
section of states-Nebraska, Oklahoma, Oregon, and South Carolina. In
general, these states had the highest number of cases of potential
duplication. In each state, we contacted NRCS field office officials in
the county with the largest number of cases to discuss whether the
payments were duplicates. Our choice of these producers, states, and
counties was not intended to be representative for projection purposes.
Finally, we interviewed officials and reviewed documentation they provided
at farm, conservation, and environmental organizations, CRS, the U.S. Fish
and Wildlife Service in the Department of the Interior, and the U.S.
Environmental Protection Agency; conducted a literature search to identify
relevant studies and articles; and attended a CSP training workshop at
USDA headquarters.

We conducted our review between February 2005 and February 2006 in
accordance with generally accepted government auditing standards. We
conducted a data reliability assessment of the fiscal years 2004 and 2005
payments data for CSP, EQIP, and WHIP and determined the data to be
sufficiently reliable. For the data obtained from the other sources noted
above, we did not independently verify the data, but we discussed with
these sources, as appropriate, the measures they take to ensure the
accuracy of these data. For the purposes for which the data were used in
this report, these measures seemed reasonable.

Appendix II

CSP Payments Information for Fiscal Years 2004 and 2005

Tables 8 through 14 summarize Conservation Security Program (CSP) payments
information for fiscal year 2004. Tables 15 through 18 summarize similar
information for fiscal year 2005, including payments for new and existing
(2004) contracts. Table 19 summarizes information on the acres  enrolled
in CSP by land type during these fiscal years. Although the farm bill
called for the establishment of CSP in fiscal year 2003, the Natural
Resources Conservation Service (NRCS) held the first program sign-up in
fiscal year 2004, after developing program regulations, training its field
staff, and introducing the program to producers and stakeholder groups.
Information on CSP payments for fiscal year 2006 was not available at the
time of our review.

To develop tables 8 through 18, we used payments information from NRCS's
Program Contracts System (ProTracts). Among other things, ProTracts is
used to manage and monitor the CSP application, contracting, and payment
process. ProTracts is a feeder system into the U.S. Department of
Agriculture's (USDA) Foundation Financial Information System (Foundation
System), the department's official accounting system for making payments
for current and prior year programs. The Foundation System records
obligations and payments made and is the source of data used in financial
statements for all USDA programs. In general, the payments data in the
Foundation System is considered official, whereas payments data in
ProTracts is considered preliminary until it has been checked, corrected,
and migrated to the Foundation System.1 For this reason, payments data
taken from these systems may not be consistent. However, in order to
separate CSP payments data by tier, payment type, and enhancement type, it
was necessary to use data from ProTracts; this level of detail or
disaggregation was not possible using data from the Foundation System.

Table 8: Total CSP Payments and Contracts by Tier, Fiscal Year 2004

Tier      Payments  Percentage of Contracts    Percentage of total Average 
                      total payments              number of contracts payment 
I       $5,696,212            17%       785                    36%  $7,256 
II      16,738,736             49       886                     41  18,892 
III     11,022,446             35       509                     23  23,620 
Total $34,457,394a           100%     2,180                   100% $15,806 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages may not total 100 due to rounding.

aOur analysis of NRCS ProTracts data indicates that total CSP payments in
fiscal year 2004 were $34,457,394 (or $34.5 million), as reflected in the
table. However, according to an NRCS official, more recent data in USDA's
Foundation Financial Information System indicates that these total
payments were $34,556,220 (or $34.6 million).

Table 9: Total CSP Payments by Payment Type, Fiscal Year 2004

Payment type                        Payments  Percentage of total payments 
Stewardship                       $5,401,915                           16% 
Existing practice                  1,355,826                             4 
New practice                           5,148                            <1 
Enhancement                       14,082,782                            41 
Advance enhancement paymenta      13,611,724                            40 
Total                            $34,457,394                          100% 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages do not total 100 due to rounding.

aFiscal year 2004 payments included advance enhancement payments. These
payments were to be limited to $10,000 per contract. For a producer who
received an advance enhancement payment, NRCS will make deductions from
subsequent payments over the remaining years of the producer's contract
such that the total advance payment would be offset. For example, for a
producer whose contract has 9 remaining years, NRCS would deduct one-ninth
of the advance enhancement payment in each of these years. NRCS officials
explained that for the fiscal year 2004 CSP sign-up, NRCS, using its
borrowing authority, obtained the maximum amount of funding available, or
$41.443 million. However, because of lower than anticipated producer
participation in CSP that year, NRCS did not need all of this money to
make annual contract payments to producers. NRCS decided to use the
remaining amounts-about $13.6 million-to make a one-time advance
enhancement payment to most (2,070 of 2,180) of the producers enrolled in
CSP that year.

Table 10: Total CSP Enhancement Payments by Enhancement Type, Fiscal Year
2004

Enhancement type                       Payments        Percentage of total 
                                                                              
                                                         enhancement payments 
Air resource management                $216,545                         2% 
Energy management                       712,384                          5 
Grazing management                      344,716                          2 
Habitat management                      953,736                          7 
Nutrient management                   3,506,663                         25 
Pest management                       3,680,118                         26 
Soil management                       4,349,110                         31 
Water management                        319,508                          2 
Total                               $14,082,782                       100% 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The information in this table excludes advance enhancement payments
made in fiscal year 2004.

Table 11: Distribution of All CSP Contracts by Payment Range (Excluding
and Including Advance Enhancement Payments in Contract Amounts), Fiscal
Year 2004

Payment           Number of    Percentage of all   Number of Percentage of 
                     contracts   contracts (amounts   contracts all contracts 
                      (amounts      exclude advance    (amounts      (amounts 
                       exclude          enhancement     include       include 
                       advance            payments)     advance       advance 
                   enhancement                      enhancement   enhancement 
                     payments)                        payments)     payments) 
$1-$5,000             1,043                  48%         763           35% 
$5,001-$10,000          394                   18         375            17 
$10,001-$15,000         232                   11         233            11 
$15,001-$20,000         138                    6         136             6 
$20,001-$25,000         143                    7         173             8 
$25,001-$30,000         104                    5          75             3 
$30,001-$35,000          40                    2          78             4 
$35,001-$40,000          86                    4          56             3 
$40,001-$45,000           0                    0         140             6 
$45,001-$50,000           0                    0          58             3 
$50,001-$55,000           0                    0           4            <1 
$55,001-$60,000           0                    0          23             1 
$60,001-$65,000           0                    0          66             3 
Total                 2,180                 100%       2,180          100% 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages may not total 100 due to rounding.

Table 12: Distribution of Tier I CSP Contracts by Payment Range (Excluding
and Including Advance Enhancement Payments in Contract Amounts), Fiscal
Year 2004

Payment           Number of Percentage of Tier I   Number of Percentage of 
                     contracts   contracts (amounts   contracts        Tier I 
                      (amounts      exclude advance    (amounts     contracts 
                       exclude          enhancement     include      (amounts 
                       advance            payments)     advance       include 
                   enhancement                      enhancement       advance 
                     payments)                        payments)   enhancement 
                                                                    payments) 
$1-$5,000               546                  70%         428           55% 
$5,001-$10,000          133                   17         141            18 
$10,001-$15,000         104                   13          78            10 
$15,001-$20,000           1                   <1          43             5 
$20,001-$25,000          1a                   <1          94            12 
$25,001-$30,000           0                    0           1            <1 
Total                   785                 100%         785          100% 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

aThis contract payment was $21,427, which exceeds the statutory payment
limit of $20,000 for a Tier I contract.

Table 13: Distribution of Tier II CSP Contracts by Payment Range
(Excluding and Including Advance Enhancement Payments in Contract
Amounts), Fiscal Year 2004

Payment           Number of   Percentage of Tier   Number of Percentage of 
                     contracts         II contracts   contracts       Tier II 
                      (amounts     (amounts exclude    (amounts     contracts 
                       exclude  advance enhancement     include      (amounts 
                       advance            payments)     advance       include 
                   enhancement                      enhancement       advance 
                     payments)                        payments)   enhancement 
                                                                    payments) 
$1-$5,000               337                  38%         220           25% 
$5,001-$10,000          160                   18         159            18 
$10,001-$15,000          81                    9          97            11 
$15,001-$20,000          90                   10          57             6 
$20,001-$25,000         113                   13          45             5 
$25,001-$30,000          83                    9          42             5 
$30,001-$35,000          22                    2          57             6 
$35,001-$40,000           0                    0          35             4 
$40,001-$45,000           0                    0         128            14 
$45,001-$50,000           0                    0          46             5 
Total                   886                 100%         886          100% 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages do not total 100 due to rounding.

Table 14: Distribution of Tier III CSP Contracts by Payment Range
(Excluding and Including Advance Enhancement Payments in Contract
Amounts), Fiscal Year 2004

Payment           Number of   Percentage of Tier   Number of Percentage of 
                     contracts        III contracts   contracts      Tier III 
                      (amounts     (amounts exclude    (amounts     contracts 
                       exclude  advance enhancement     include      (amounts 
                       advance            payments)     advance       include 
                   enhancement                      enhancement       advance 
                     payments)                        payments)   enhancement 
                                                                    payments) 
$1-$5,000               160                  31%         115           23% 
$5,001-$10,000          101                   20          75            15 
$10,001-$15,000          47                    9          58            11 
$15,001-$20,000          47                    9          36             7 
$20,001-$25,000          29                    6          34             7 
$25,001-$30,000          21                    4          32             6 
$30,001-$35,000          18                    4          21             4 
$35,001-$40,000          86                   17          21             4 
$40,001-$45,000           0                    0          12             2 
$45,001-$50,000           0                    0          12             2 
$50,001-$55,000           0                    0           4             1 
$55,001-$60,000           0                    0          23             5 
$60,001-$65,000           0                    0          66            13 
Total                   509                 100%         509          100% 

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Table 15: Total CSP Payments and Contracts by Tier, Fiscal Year 2005

Tier       Payments  Percentage of Contracts   Percentage of total Average 
                       total payments             number of contracts payment 
I       $49,407,374            28%     7,294                   49%  $6,774 
II       67,268,160             38     4,530                    30  14,849 
III      60,708,854             34     3,059                    21  19,846 
Total $177,384,387a           100%    14,883                  100% $11,919 

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Note: The information in this table is based on contracts approved for
fiscal years 2004 and 2005. Specifically, the information includes the
payments made in the second year of the fiscal year 2004 contracts and the
first year of the fiscal year 2005 contracts.

aOur analysis of NRCS ProTracts data indicates that total CSP payments in
fiscal year 2005 were $177,384,387 (or $177.4 million), as reflected in
the table. However, according to an NRCS official, more recent data in
USDA's Foundation Financial Information System indicates that these total
payments were $171,388,723 (or $171.4 million).

Table 16: Total CSP Payments by Payment Type, Fiscal Year 2005

Payment type                    Payments      Percentage of total payments 
Stewardship                  $27,428,071                               15% 
Existing practice              6,864,218                                 4 
New practice                     119,777                                <1 
Enhancement                  142,972,322                                81 
Total                       $177,384,387                              100% 

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Notes: (1) The information in this table is based on contracts approved in
fiscal years 2004 and 2005. Specifically, the information includes the
payments made in the second year of the fiscal year 2004 contracts and the
first year of the fiscal year 2005 contracts. (2) NRCS did not make any
advance enhancement payments in fiscal year 2005. (3) The percentages do
not total 100 due to rounding.

Table 17: Total CSP Enhancement Payments by Enhancement Type, Fiscal Year
2005

Enhancement type                        Payments       Percentage of total 
                                                                              
                                                         enhancement payments 
Air resource management               $4,767,408                        3% 
Drainage management                      965,890                         1 
Energy management                      6,259,355                         4 
Grazing management                     4,552,552                         3 
Habitat management                    11,186,833                         8 
Nutrient management                   27,239,832                        19 
Pest management                       32,400,211                        23 
Salinity management                        2,067                        <1 
Soil management                       50,025,411                        35 
Water management                       5,572,763                         4 
Total                               $142,972,322                      100% 

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Notes: (1) The information in this table is based on contracts approved in
fiscal years 2004 and 2005. Specifically, the information includes the
payments made in the second year of the fiscal year 2004 contracts and the
first year of the fiscal year 2005 contracts. (2) The percentages do not
total 100 due to rounding.

Table 18: Distribution of CSP Contracts by Payment Range, Fiscal Year 2005

Payment               Number of contracts    Percentage of total contracts 
$1-$5,000                           5,423                              36% 
$5,001-$10,000                      2,738                               18 
$10,001-$15,000                     2,504                               17 
$15,001-$20,000                     1,162                                8 
$20,001-$25,000                       724                                5 
$25,001-$30,000                       998                                7 
$30,001-$35,000                       630                                4 
$35,001-$40,000                       284                                2 
$40,001-$45,000                      420a                                3 
Total                              14,883                             100% 

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Note: The information in this table is based on contracts approved in
fiscal years 2004 and 2005. Specifically, the information includes the
payments made in the second year of the fiscal year 2004 contracts and the
first year of the fiscal year 2005 contracts.

aThis total includes one contract payment that exceeded $45,000 ($45,228).

Table 19: Acres Enrolled in CSP by Land Type, Fiscal Years 2004 and 2005

Fiscal year  Cropland         Irrigated Pasture     Range Other      Total 
                                  cropland                         
2004        1,083,055           189,682  30,443   577,004 8,227  1,888,411 
2005        4,805,342         1,483,755 107,257 2,639,641     0  9,035,995 
Total       5,888,397         1,673,437 137,700 3,216,645 8,227 10,924,406 

Source: NRCS.

Appendix III

CSP Application and Enrollment Process Flowchart 

Appendix IV

Other Key USDA Conservation Programs

In addition to to the Conservation Security Program (CSP), the U.S.
Department of Agriculture (USDA) manages a number of other conservation
programs. In general, these other programs (1) help farmers and ranchers
address existing environmental problems by paying for a portion of the
cost of needed conservation practices or structures; (2) keep land in
farming or grazing by purchasing rights to part of the land, such as
development rights through easements; or (3) idle or retire
environmentally sensitive land, such as highly erodible land or wetlands,
from production. In contrast, CSP is focused on operations that already
have addressed environmental problems and have achieved a high level of
environmental stewardship, while keeping the land in production. Producers
cannot receive CSP payments and payments under another USDA conservation
program for the same conservation practices or activities on the same
land. However, producers can use assistance received under other USDA
programs, as well as assistance received under state or private
conservation programs, to arrive at a high level of stewardship necessary
to participate in CSP. Table 20 describes other key USDA conservation
programs.

Table 20: Description of Other Key USDA Conservation Programs

Dollars in millions 
Program             Description                       Total authorization, 
                                                            fiscal years 2002 
                                                                 through 2007 
Conservation        Provides annual rental payments                $11,118 
Reserve Program     and cost-share and technical      
                       assistance to establish permanent 
                       vegetative land cover in exchange 
                       for taking environmentally        
                       sensitive cropland out of         
                       production for 10 to 15 years.    
                       Most program lands are enrolled   
                       through the use of contracts and  
                       competitive bidding during        
                       designated sign-ups. Some         
                       economic uses of enrolled land    
                       are allowed with a reduction of   
                       annual rental payments, such as   
                       the installation of wind turbines 
                       and managed haying and grazing.   
                       Up to 39.2 million acres may be   
                       enrolled at any one time.         
Environmental       Offers incentive and cost-share                  5,800 
Quality Incentives  payments and technical assistance 
Program             through 1- to 10-year contracts   
                       to implement structural and land  
                       management practices or to        
                       develop a comprehensive nutrient  
                       management plan. At least 60      
                       percent of annual funds made      
                       available for cost-share and      
                       incentive payments are required   
                       to be targeted at practices       
                       relating to livestock production. 
Wetlands Reserve    Targets restoration of                           1,506 
Program             prior-converted and farmed        
                       wetlands to a wetland condition.  
                                                         
                       Acreage can be enrolled in the    
                       program through the use of        
                       permanent easements, 30-year      
                       easements, and restoration        
                       cost-share agreements. Program    
                       lands may be used for compatible  
                       economic uses such as hunting,    
                       fishing, or limited timber        
                       harvests. Up to 2.275 million     
                       acres may be enrolled.            
Farmland Protection Purchases easements or other                       597 
Program             interests in eligible land (up to 
                       50 percent of fair market value)  
                       for the purpose of protecting     
                       topsoil by limiting               
                       nonagricultural uses of the land. 
                       Eligible land means land on a     
                       farm or ranch that is subject to  
                       a pending offer for purchase from 
                       an eligible entity and that has   
                       prime, unique, or other           
                       productive soil or that contains  
                       historical or archeological       
                       resources. Eligible land includes 
                       cropland, rangeland, grassland,   
                       pastureland, and forestland that  
                       is an incidental part of the      
                       agricultural operation.           
Wildlife Habitat    Offers cost-share payments                         360 
Incentives Program  through 5- to 10-year agreements  
                       to develop and protect and        
                       restore wildlife habitat. Allows  
                       up to 15 percent of funds each    
                       year to be used for increased     
                       cost-share assistance to          
                       producers who enter into 15-year  
                       agreements.                       
Grassland Reserve   Offers permanent and 30-year                      $254 
Program             easementsa and 10- to 30-year     
                       rental agreements to grassland    
                       owners to assist owners in        
                       restoring and conserving eligible 
                       land. Up to 2 million acres may   
                       be enrolled.                      

Sources: GAO analysis of USDA and CBO information and the 2002 farm bill.

aIn states that impose a maximum duration for easements, the Secretary can
use an easement for the maximum duration allowed under state law.

Appendix V

Explanation of Budget Scoring

Budget scoring or scorekeeping is the process of estimating the budgetary
effects of pending and enacted legislation and comparing them with a
baseline, such as a budget resolution, or to any limits that may be set in
law. Scorekeeping tracks data such as budget authority, receipts, outlays,
the surplus or deficit, and the public debt limit.  The process allows
Congress to compare the cost of proposed budget policy changes with
existing law in order to enforce spending and revenue levels agreed upon
in the budget resolution. The congressional budget committees and the
Congressional Budget Office (CBO) score legislation in relation to levels
set by Congress in concurrent budget resolutions. The Office of Management
and Budget (OMB) also scores legislation for the purposes of developing
the President's annual budget proposal, executing the budget, and
providing the President with estimates of the budgetary impacts of pending
legislation awaiting the President's signature (or veto).

Budget scorekeeping guidelines are used by the congressional budget
committees, CBO, and OMB (the "scorekeepers") in measuring compliance with
the Congressional Budget and Impoundment Control Act of 1974, as amended,
and the Balanced Budget and Emergency Deficit Control Act of 1985, as
amended.1 The purpose of the guidelines is to ensure that the scorekeepers
measure the effects of legislation on the deficit consistent with
established scorekeeping conventions and with specific legislative
requirements regarding discretionary spending, direct spending, and
receipts. These guidelines are reviewed annually by the scorekeepers and

revised as necessary to adhere to that purpose. The guidelines are
contained in Appendix A of OMB Circular No. A-11.2

In general, CBO prepares costs estimates for all bills other than
appropriations bills when they are reported by a full committee of either
House of Congress. However, CBO also prepares cost estimates for proposals
at other stages of the legislative process at the request of a committee
of jurisdiction, a budget committee, or the congressional leadership. For
example, CBO may prepare cost estimates for a series of bills to be
considered by a subcommittee, including draft bills not yet introduced, or
for amendments to be considered during committee markups. Similarly, it
may prepare cost estimates for floor amendments and for bills that pass
one or both Houses. For appropriations bills, CBO provides estimates of
outlays that would result from the provision of budget authority. CBO also
provides the budget and appropriation committees with frequent tabulations
of congressional action on both spending and revenue bills so that
Congress can know whether it is acting within the limits set by the annual
budget resolution. After CBO cost estimates have been transmitted, they
may be revised to correct errors or to incorporate new or updated
information. OMB also may revise its estimates for similar reasons.

The Director, CBO, transmits by letter all formal budget and mandate cost
estimates of legislative proposals and all requested analyses.
Scorekeeping data published by CBO include, but are not limited to, status
reports on the effects of congressional actions and comparisons of these
actions to targets and ceilings set by Congress in the budget resolutions.
Weekly status reports are published in the Congressional Record for the
Senate during the weeks it is in session and status reports for the House
of Representatives are published at least monthly when the House is in
session. CBO is also required to produce periodic scorekeeping reports on
at least a monthly basis pursuant to section 308(b) of the Congressional
Budget and Impoundment Act of 1974, as amended. OMB scorekeeping data
generally are not published.

Appendix VI

Time Line of Legislative Actions and CBO and OMB 10-Year Estimates of CSP
Costs

aFarm Security and Rural Investment Act of 2002, Pub. L. No. 107-171, 116
Stat. 134 (2002).

bAgricultural Assistance Act of 2003, Pub. L. No. 108-7, tit. II, S: 216,
Stat. 538, 546 (2003).

cAgriculture, Rural Development, Food and Drug Administration, and Related
Agencies Appropriations Act, 2004, S: 752, and Miscellaneous
Appropriations and Offsets Act, 2004, S: 101, enacted by the Consolidated
Appropriations Act, 2004, Pub. L. No. 108-199, 118 Stat. 3 (2004). The
exact amounts of these caps were $41.443 million and $3.773 billion,
respectively.

dEmergency Supplemental Appropriations for Hurricane Disasters Assistance
Act, 2005, S: 101(e), enacted by the Military Construction Appropriations
and Emergency Hurricane Supplemental Appropriations Act, 2005, Pub. L. No.
108-324, 118 Stat. 1220 (2004). The exact amount of this cap was $6.037
billion. The Deficit Reduction Act of 2005, Pub. L. No. 109-171, S: 1202,
(2006), repealed this cap.

eAgriculture, Rural Development, Food and Drug Administration, and Related
Agencies Appropriations Act, 2005, S: 749, enacted by the Consolidated
Appropriations Act, 2005, Pub. L. No. 108-447, 118 Stat. 2809 (Dec. 8,
2004). This law limited the amount of funds available to pay the salaries
and expenses of personnel to carry out CSP to $202.411 million. NRCS
officials said that this amount was the total amount of funding available
to CSP for fiscal year 2005.

fAgriculture, Rural Development, Food and Drug Administration, and Related
Agencies Appropriations Act, 2006, Pub. L. No. 109-97, tit.VII, S: 741,
119 Stat. 2120, 2155 (Nov. 10, 2005).

gDeficit Reduction Act of 2005, Pub. L. No. 109-171, S: 1202 (2006). The
exact amount of these caps were $1.954 billion for fiscal years 2006
through 2010 and $5.650 billion for fiscal years 2006 through 2015.

hEstimate based on CSP as proposed in S. 1731, 107th Cong. (2001).

iEstimate based on CSP as in the farm bill conference report, H.R. Conf.
Rep. No. 107-424 (2002), just prior to the farm bill being enacted into
law.

Appendix VII

Description of USDA and NRCS Internal Controls and the Results of Reviews
of These Controls

Federal agencies have been required for over 20 years to establish and
assess internal controls in their programs and financial management
activities pursuant to the Federal Managers' Financial Integrity Act of
1982 and other legislative and administrative initiatives.1 Furthermore,
the Improper Payments Information Act of 2002 requires each agency to
annually review all programs and activities the agency administers and to
identify those that may be susceptible to significant improper payments.2
To ensure that programs are managed with integrity and that program
operations comply with these requirements, the U.S. Department of
Agriculture (USDA) issued a departmental regulation, Management
Accountability and Control, and a related departmental manual, Management
Control Manual.3 The departmental regulation establishes departmentwide
policy for internal controls. The manual discusses specific controls,
including separation of duties, reconciliation of records from two
sources, reconciliation of records with physical inventories, limiting
access (e.g., authorizations on data systems), providing supervision,
documentation of processes and procedures, written delegations of
authority, analyzing and reporting on risk, and periodic reviews of
performance. As a USDA agency, the Natural Resources Conservation Service
(NRCS) is to follow the internal control guidance in this regulation and
manual.

NRCS also has established agency-specific guidance on internal controls,
found principally in its General Manual and its Conservation Programs
Manual. The General Manual establishes NRCS policy for effectively
guarding against waste, loss, and misuse of program resources.
Specifically, it outlines the process through which the agency complies
with governmentwide requirements for internal management control. The
Conservation Programs Manual provides specific policy, guidance, and
operating procedures for implementing the Conservation Security Program
(CSP) (and other programs). For example, the manual sets procedures for
key program controls such as the documentation required from an applicant
and the conduct of CSP eligibility determinations and contract compliance
reviews. The manual also discusses specific responsibilities for program
implementation as they relate to internal controls. For example, within
each state, the NRCS State Conservationist is responsible for ensuring
compliance with internal controls, including separation of duties related
to contract approval and payment certification. In addition, this official
is responsible for designating in writing the authorized NRCS
representative for obligating program funds, disbursing payments, and
acting as Contracting Officer.

USDA's Office of Inspector General (IG) issued a report in January 2005
that examined NRCS's compliance with the Improper Payments Information Act
of 2002.4 Among other things, the IG found that NRCS had not taken
sufficient action to comply with the act and related guidance set forth by
OMB and USDA's Office of the Chief Financial Officer. In summary, the IG
found that NRCS had neither identified the internal control measures in
place to preclude, or detect in a timely manner, improper payments nor did
it know if the controls were in operation. In addition, the IG noted that
NRCS had not conducted adequate risk assessments of potential improper
payments for the programs it administers, including CSP. According to the
IG, NRCS officials stated that risk assessments were not completed because
they did not have the time or personnel to perform them. These officials
also said that they misinterpreted the guidance regarding what they needed
to do to comply with the act. Accordingly, the IG recommended that NRCS
conduct more thorough risk assessments of all programs with outlays of $10
million or more (includes CSP) and develop an estimated error rate by (1)
developing criteria for identifying program vulnerabilities, (2)
determining acceptable risk levels, (3) ranking the risk factors, and (4)
establishing controls to ensure their timely and accurate completion. NRCS
agreed with the IG's recommendations and indicated that it would take
corrective actions by April 30, 2005. In February 2006, IG officials
indicated that the IG had not assessed the adequacy of these actions,
including NRCS's preparation of risk assessments.

In a January 2004 report, GAO found that significant, pervasive
information security control weaknesses exist at USDA, including serious
access control weaknesses, as well as other information security
weaknesses.5 Specifically, USDA had not adequately protected network
boundaries, sufficiently controlled network access, appropriately limited
mainframe access, or fully implemented a comprehensive program to monitor
access activity. In addition, weaknesses in other information security
controls, including physical security, personnel controls, system
software, application software, and service continuity, further increase
the risk to USDA's information systems. As a result, sensitive
data-including information relating to the privacy of U.S. citizens,
payroll and financial transactions, proprietary information, agricultural
production and marketing estimates, and mission critical data-are at
increased risk of unauthorized disclosure, modification, or loss, possibly
without being detected. Accordingly, GAO recommended that USDA establish a
comprehensive security management program, including (1) ensuring that
security management positions have the authority and cooperation of agency
management to effectively implement and manage security programs, (2)
completing periodic risk assessments for systems, (3) completing
information security plans and establishing policies and procedures on the
basis of identified risks, (4) ensuring that employees complete security
awareness training, (5) implementing ongoing tests and evaluations of
controls, (6) completing system certifications and accreditations, and (7)
developing corrective action plans that clearly tie to identified
weaknesses. USDA concurred, but as of January 2006, USDA had not yet fully
implemented these recommendations.

Furthermore, USDA's fiscal year 2005 performance and accountability report
discusses material weaknesses related to USDA's financial and accounting
systems and information security program.6 Among the material weaknesses
identified in the report are NRCS's application controls for its Program
Contracts System (ProTracts). To address this weakness, NRCS plans to take
a number of actions in fiscal year 2006, including (1) documenting the
ProTracts change control process; (2) documenting changes to the ProTracts
software; (3) establishing a ProTracts testing process; (4) establishing a
formally approved document for the ProTracts payment specifications; and
(5) establishing a schedule for the systematic reconciliation of ProTracts
appropriations, obligations, and payments with amounts recorded in the
department's Foundation Financial Information System.7

Appendix VIII

Comments from the U.S. Department of Agriculture

The following are GAO's comments on the letter from the U.S. Department of
Agriculture dated April 10, 2006.

GAO Comments

1.We deleted the language cited by NRCS as being from an earlier Oversight
and Evaluation (O&E) draft report and no longer accurate.

2.Because some NRCS state offices have not fully adhered to the agency's
national guidance for wildlife habitat assessment criteria, NRCS said that
it issued a national bulletin to all of its state offices during the
fiscal year 2006 CSP sign-up to reemphasize the guidance that these
offices must use in developing their wildlife habitat assessment criteria.
While the promulgation of this bulletin should be helpful, we still
believe that NRCS should review and field check each NRCS state office's
assessment criteria to ensure that states use consistent criteria and
achieve the wildlife habitat benefits intended by the national guidance.
In addition, field checks would help to establish baseline information on
the habitat results produced by the existing general wildlife habitat
assessment criteria. Such information would be useful in determining
whether these criteria need adjustment.

3.We are not aware of any formal estimates or studies of the potential
cost of CSP in the absence of funding caps and NRCS cost controls. The
report discusses estimates of program costs developed by the Congressional
Budget Office (CBO) and the Office of Management and Budget (OMB) that
have ranged as high as $9.7 billion. In general, these estimates consider
statutory funding caps, farm bill provisions, and the manner in which NRCS
has implemented the program, including cost control measures. NRCS cites
the benefit-cost assessment it prepared for the amendment to the interim
final rule for CSP as a possible source of this information. However,
according to this assessment, none of the alternatives discussed fully
excludes NRCS cost controls. In addition, the assessment notes that the
benefit-cost model used has a number of simplifying assumptions and,
because of these assumptions, the model should not be relied on to predict
actual participation rates, tier or regional distribution, or the
magnitude of payments. Instead, the assessment indicates the model is best
used to predict the direction of how participation would change if a
particular program feature is changed, rather than the magnitude of the
change. Furthermore, the assessment states that the benefit-cost model has
not been validated so its ability to predict program participation has not
been assessed.

4.We have modified the report to reflect this information on the methods
NRCS has used to determine whether producers are sufficiently addressing
water quality issues.

5.In lieu of including a reference in its Conservation Programs Manual,
NRCS said that it is proposing that NRCS wildlife biologists develop a
special technical note that would describe how the national guidance for
wildlife habitat assessment should be used by NRCS state offices. While
this step would be useful, we still believe that the inclusion of a
reference in the manual to the national guidance would help to emphasize
its importance to NRCS state and field-level employees. The Conservation
Programs Manual is the primary guidance document used by NRCS state and
field-level officials in implementing CSP. Furthermore, the inclusion of a
reference in this manual need not be a complete restatement of the
national guidance that is provided in other documents, including training
materials and the technical note, if created. Instead, this reference
could state that national guidance exists and should be followed by state
offices in developing their wildlife habitat assessment criteria. The
reference also could identify relevant resource materials (other manuals,
bulletins, technical notes, training materials, etc.) that describe this
guidance.

6.We agree that the planned revisions in the self-assessment workbook and
the contract appendix will provide greater assurance that CSP payments do
not duplicate payments made by other USDA conservation programs. However,
while most producers probably provide accurate and complete information on
their program applications, NRCS has found that this is not always the
case. For example, according to a February 2006 News Release by NRCS's
Washington state office, 15 CSP contract holders in the Upper Crab and
Rock watersheds were issued "intent to terminate" notices regarding their
submission of apparently false information associated with their program
applications. Specifically, these producers appeared to have provided
false or altered soil test results. USDA's Office of Inspector General is
investigating this matter. Because program applicants may purposefully or
inadvertently provide inaccurate information in their program
applications, we urge NRCS to proceed with the development and
implementation of automated methods to identify potentially duplicative
payments before they are made.

Appendix IX

GAO Contact and Staff Acknowledgments

GAO Contact

Robert A. Robinson (202) 512-3841

Staff Acknowledgments

In addition to the individual named above, James R. Jones, Jr., Assistant
Director; William B. Bates; Gary T. Brown; John W. Delicath; Barbara J. El
Osta; Nathan A. Morris; Lynn M. Musser; Katherine M. Raheb; and Amy E.
Webbink made key contributions to this report.

Related GAO Products

Agricultural Conservation: USDA Should Improve Its Methods for Estimating
Technical Assistance Costs. GAO-05-58 . Washington, D.C.: November 30,
2004.

Information Security: Further Efforts Needed to Address Serious Weaknesses
at USDA. GAO-04-154 . Washington, D.C.: January 30, 2004.

Department of Agriculture: Status of Efforts to Address Major Financial
Management Challenges. GAO-03-871T . Washington, D.C.: June 10, 2003.

Agricultural Conservation: USDA Needs to Better Ensure Protection of
Highly Erodible Cropland and Wetlands. GAO-03-418 . Washington, D.C.:
April 21, 2003.

Agricultural Conservation: State Advisory Committees' Views on How USDA
Programs Could Better Address Environmental Concerns. GAO-02-295 .
Washington, D.C.: February 22, 2002.

Environmental Protection: Federal Incentives Could Help Promote Land Use
That Protects Air and Water Quality. GAO-02-12 . Washington, D.C.: October
31, 2001.

Budget Scoring: Budget Scoring Affects Some Lease Terms but Full Extent Is
Uncertain. GAO-01-929 . Washington, D.C.: August 31, 2001.

Budget Issues: Budget Enforcement Compliance Report. GAO/AIMD-00-174 .
Washington, D.C.: May 31, 2000.

Natural Resources Conservation Service: Additional Actions Needed to
Strengthen Program and Financial Accountability. GAO/RCED-00-83 .
Washington, D.C.: April 7, 2000.

Water Quality: Federal Role in Addressing-and Contributing to-Nonpoint
Source Pollution. GAO/RCED-99-45 . Washington, D.C.: February 26, 1999.

Commodity Credit Corporation: Information on the Availability, Use, and
Management of Funds. GAO/RCED-98-114 . Washington, D.C.: April 28, 1998.

Budget Process: Issues Concerning the 1990 Reconciliation Act.
GAO/AIMD-95-3 . Washington, D.C.: October 7, 1994.

Budget Policy: Issues in Capping Mandatory Spending. GAO/AIMD-94-155 .
Washington, D.C.: July 18, 1994.

(360544)

www.gao.gov/cgi-bin/getrpt? GAO-06-312 .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact Robert A. Robinson at (202) 512-3841 or
[email protected].

Highlights of GAO-06-312 , a report to the Chairman, Committee on
Appropriations, U.S. Senate

April 2006

CONSERVATION SECURITY PROGRAM

Despite Cost Controls, Improved USDA Management Is Needed to Ensure Proper
Payments and Reduce Duplication with Other Programs

The Conservation Security Program (CSP)-called for in the 2002 farm bill
and administered by the U.S. Department of Agriculture's (USDA) Natural
Resources Conservation Service (NRCS)-provides financial assistance to
producers to reward past conservation actions and to encourage further
conservation stewardship. CSP payments may be made for structural or land
management practices, such as strip cropping to reduce erosion. CSP has
raised concerns among some stakeholders because CSP cost estimates
generally have increased since the 2002 farm bill's enactment. For
example, the Congressional Budget Office's estimate increased from $2
billion in 2002 to $8.9 billion in 2004.

GAO determined (1) why CSP cost estimates generally increased; (2) what
authority USDA has to control costs and what cost control measures exist;
and (3) what measures exist to prevent duplication between CSP and other
USDA conservation programs and what duplication, if any, has occurred.

What GAO Recommends

GAO recommends, in part, that NRCS review its state offices' wildlife
habitat assessment criteria and develop a process to preclude and identify
duplicate payments. NRCS generally agreed with GAO's findings and
recommendations.

Various factors explain why estimates of CSP costs generally increased
since the 2002 farm bill's enactment. Of most importance, little
information was available regarding how this program would be implemented
at the time of its inception in 2002. As more information became
available, cost estimates rose. In addition, the time frames on which the
estimates were based changed. While the initial estimates covered years in
which theprogram was expected to be nonoperational or minimally
operational, subsequent estimates did not include these years.

The farm bill provides USDA general authority to control CSP costs,
including authority to establish criteria that enable it to control
program participation and payments and, therefore, CSP costs. For example,
NRCS restricts participation by limiting program enrollment each year to
producers in specified, priority watersheds. NRCS also has established
certain CSP payment limits at levels below the maximum allowed by the
statute. However, efforts to control CSP spending could be improved by
addressing weaknesses in internal controls and inconsistencies in the
wildlife habitat assessment criteria that NRCS state offices use, in part,
to determine producer eligibility for the highest CSP payment level.
Inconsistencies in these criteria also may reduce CSP's conservation
benefits.

The farm bill prohibits duplicate payments for the same practice on the
same land made through CSP and another USDA conservation program. Various
other farm bill provisions also reduce the potential for duplication. For
example, as called for under the farm bill, CSP may reward producers for
conservation actions they have already taken, whereas other programs
generally provide assistance to encourage new actions or to idle or retire
environmentally sensitive land from production. In addition, CSP
regulations establish higher minimum eligibility requirements for CSP than
for other programs. However, despite these legislative and regulatory
provisions, the possibility that producers can receive duplicate payments
remains because of similarities in the conservation actions financed
through these programs. In addition, NRCS does not have a comprehensive
process to preclude or identify such duplicate payments. In reviewing
NRCS's payments data, GAO found a number of examples of duplicate
payments.

___________________________________________________________________

Strip Cropping to Reduce Soil Erosion

Note: Strip cropping means growing row crops, forages, or small grains in
equal width strips.
*** End of document. ***