Conservation Security Program, 15201-15223 [05-5894]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation
• Natural Resources Conservation Service

[Federal Register Volume 70, Number 57 (Friday, March 25, 2005)]
[Rules and Regulations]
[Pages 15201-15223]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-5894]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

Natural Resources Conservation Service

7 CFR Part 1469

RIN 0578-AA36


Conservation Security Program

AGENCY: Natural Resources Conservation Service and Commodity Credit 
Corporation, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This document establishes an amendment to the interim final 
rule governing activities under the Conservation Security Program (CSP) 
which is administered by the Natural Resources Conservation Service 
(NRCS). The CSP sets forth a mechanism to provide financial and 
technical assistance to agricultural producers who, in accordance with 
certain requirements, conserve and improve the quality of soil, water, 
air, energy, plant and animal life, and support other conservation 
activities. The CSP regulations implement provisions of the Food 
Security Act of 1985, as amended by the Farm Security and Rural 
Investment Act of 2002, and are intended to assist agricultural 
producers in taking actions that will provide long-term beneficial 
effects to our Nation.

DATES: Effective date: March 25, 2005. Comments must be received by 
July 25, 2005.

ADDRESSES: Send comments by mail to Financial Assistance Programs 
Division, Natural Resources Conservation Service, P.O. Box 2890, or by 
e-mail to FarmBillRules@usda.gov; Attn: Conservation Security Program. 
You may access this interim final rule via the Internet through the 
NRCS homepage at https://www.nrcs.usda.gov. Select ``Farm Bill. The rule 
may also be reviewed and comments submitted via the Federal 
Government's centralized rulemaking Web site at https://
www.regulations.gov.''

FOR FURTHER INFORMATION CONTACT: Craig Derickson, Conservation Security 
Program Manager, Financial Assistance Programs Division, NRCS, P.O. Box 
2890, Washington, DC 20013-2890, telephone: (202) 720-1845; fax: (202) 
720-4265.

SUPPLEMENTARY INFORMATION: This document establishes an amendment to 
the interim final rule governing activities under the Conservation 
Security Program (CSP). The CSP is a voluntary program administered by 
NRCS, using the authorities and funds of the Commodity Credit 
Corporation (CCC). CSP provides financial and technical assistance to 
producers who advance the conservation and improvement of soil, water, 
air, energy, plant and animal life, and other conservation purposes on 
Tribal and private working lands. Such lands include cropland, 
grassland, prairie land, improved pasture, and rangeland, as well as 
forested land and other non-cropped areas that are an incidental part 
of an agricultural operation. The amendment may be reviewed via the 
Federal Government's centralized rulemaking Web site at https://
www.regulations.gov.
    The CSP regulations implement provisions set out in Title XII, 
Chapter 2, Subchapter A, of the Food Security Act of 1985, 16 U.S.C. 
3801 et seq., as amended by the Farm Security and Rural Investment Act 
of 2002, Public Law 107-171, and are intended to assist agricultural 
producers in taking actions that will provide long-term beneficial 
effects to our Nation.
    The CSP helps support those farmers and ranchers who reach the 
pinnacle of good land stewardship, and encourage others to conserve 
natural resources on their farms and ranches. During 2004, NRCS held a 
CSP sign-up in 18 watersheds covering 22 states. This phased-in 
approach to CSP implementation brought forth several issues and 
concerns that encompass the broad range of agricultural production at 
all scales including mainstream commodity production and small-scale 
niche producers. Additional questions are incorporated below with a 
request for public comment in order to more

[[Page 15202]]

fully harness the program potential for environmental performance and 
streamline the underlying delivery system. NRCS intends to finalize the 
CSP rule once additional programmatic experience is gathered with a 
full-scale sign-up in 2005.
    The CSP amendment is based on an interim final rule that was 
published in the Federal Register on June 21, 2004 (69 FR 34501). The 
comment period for that rulemaking proceeding ended October 5, 2004 (69 
FR 56159). NRCS received more than 13,400 submissions that raised 
numerous issues. NRCS received over 13,300 submissions from farmers, 
ranchers, and other individuals, 8 from businesses, 41 from non-
governmental organizations (including, but not limited to, conservation 
and agricultural industry organizations), one from an unidentified 
organization, two from academic institutions, and ten from State, 
local, and Tribal governments. Ninety-seven percent of the submissions 
were form letters, and most of the issues raised during the comment 
period were already raised and addressed in the interim final rule. 
This document affirms these earlier responses and discusses only the 
new issues that were not already discussed in the interim final rule. 
Accordingly, based on the rationale set forth in the interim final rule 
and this document, the provisions of the interim final rule are adopted 
as an amendment with changes discussed below. NRCS intends to finalize 
the CSP rule once additional programmatic experience is gathered with a 
full-scale sign-up in 2005.

Responses to Comments

    We first address general comments and then present our response to 
comments and explanation of changes associated with specific sections 
of the interim final rule. In addition to the changes discussed below, 
NRCS also made non-substantive changes for purposes of clarification.
    Commenters asserted that NRCS should adopt the highly successful 
model of producer-initiated grants under USDA's Sustainable Agriculture 
Research and Education (SARE) program in establishing protocols and 
payment rates for on-farm research and demonstration. Although NRCS 
made no changes based on these comments, NRCS is reviewing the SARE 
program and other programs to determine whether to expand the eligible 
list of enhancements that could be allowed under the statutory 
provisions.
    Commenters asserted that NRCS should not allow participation in the 
CSP by farmers who spray any toxics based on the argument that such 
farmers would have already despoiled the land. NRCS made no changes 
based on these comments. To be eligible for CSP payments, producers 
must meet minimum soil and water requirements which could not be met 
unless producers followed appropriate practices regarding the use of 
fertilizers, manure, and pesticides.
    Commenters asserted that NRCS should reconsider whether the 
Conservation Security Program is the proper program to provide 
incentives for types of renewable energy production that already 
qualify for Federal incentives, such as tax credits and grant funding. 
NRCS made no changes based on these comments. The statutory provisions 
at 16 U.S.C. 3838a specifically provide for the CSP to assist producers 
of agricultural operations in promoting, among other things, the 
``conservation and improvement of the quality of * * * `energy' and 
identifies energy conservation measures as eligible conservation 
practices.'' This rule is constructed to include energy management and 
energy creation when it ultimately leads to conservation or 
improvement.
    Commenters asserted that the regulations should include provisions 
reflecting the statutory provisions for renewal of contracts. NRCS made 
no changes based on these comments. This is covered adequately by the 
statute.

Section by Section Discussion

Section 1469.2 Administration

    Commenters asserted that to prevent administrative overreaching, 
NRCS should delete the provisions in Sec.  1469.2(b) that grant the 
NRCS Chief authority to modify or waive provisions of the CSP. NRCS 
made no changes based on these comments. The provisions of Sec.  
1469.2(b) contain appropriate safeguards by allowing a waiver only if 
the Chief determines (for a particular limited situation) that the 
provisions to be waived would be inappropriate and inconsistent with 
the goals of the program.

Section 1469.3 Definitions

    There were several changes and comments to the definition of 
agricultural land eligible to be enrolled in the CSP. The statutory 
provisions at 16 U.S.C. 3838a includes as eligible land for CSP 
``private agricultural land (including cropland, grassland, prairie 
land, improved pasture land, and rangeland).'' Commenters asserted that 
NRCS should remove silvopasture as pastureland eligible for CSP in 
order to better encourage environmentally sound management of invasive 
species and to protect wildlife and habitat. NRCS made no changes based 
on these comments. Silvopasture is improved pasture land and, 
therefore, is eligible for CSP.
    NRCS experience during the 2004 sign-up was that certain 
agricultural products, such as sugar maple and ginseng, might be 
excluded from the program by the exclusion of forestland as defined in 
the rule. Such products are cultivated more like orchards, typically 
consisting of a monoculture requiring more intensive agricultural 
inputs than a forestland. NRCS proposes to adjust the definition of 
agricultural land to include land of varying cover types, primarily 
managed through a low input system, for the production of food, fiber 
or other agricultural products to allow inclusion of these products. 
NRCS is proposing a conforming change to the definition of forest land.
    Less intensively managed forest systems used for foraging 
activities are not currently included in CSP. The commercial harvest of 
products, such as landscaping plants, fungi, floral greens, and wild 
edible plants, is on the rise. Most forestland managed for these 
products will qualify for CSP since very rarely are nutrients of any 
kind applied, the areas are not grazed so protection of streams is not 
an issue, pest issues are generally sporadic in nature so few if any 
pesticides are used, harvesting of most non-wood products is 
accomplished by hand so equipment use is limited to existing roads, and 
for the most part irrigation is not used. However, the tools commonly 
used for assessing cropland, such as RUSLE2, are not suited for these 
forested conditions and there is no consistent system for collecting 
data to determine sustainability or quality criteria. NRCS expects that 
tools assessing the applicable quality criteria for the various 
resource concerns would need to be developed or existing tools would 
need to be modified to allow the agency to determine the appropriate 
tier and enrollment categories in which to place such operations. NRCS 
is seeking comment and information about the best way to accommodate 
and consider forested land products in CSP. Specifically, if included 
in future program implementation, on which landuse should the 
stewardship payments be based and what analytical tools should measure 
performance?
    Commenters asserted that NRCS should modify the definition of 
``agricultural operation'' to encourage efficient NRCS spending, to 
facilitate eligibility determinations for the agency and the producer, 
and to guard against program fraud and abuse. NRCS made

[[Page 15203]]

no changes as a result of these comments. The delineation of an 
agriculture operation is not a condition of eligibility. It determines 
contract boundaries and tier placement. Also, the definition is not the 
place to promote efficient spending. Program efficiency is an outcome 
of the eligibility, minimum requirements, and tier criteria. Fraud and 
abuse is handled as a separate section within the rule and has no 
relevance to this definition.
    The interim final rule at Sec.  1469.6(b)(3)(ii) gives some 
preferences to limited resource producers by allowing limited resource 
producer participation to be a factor considered in developing the 
enrollment subcategories. Commenters asserted that NRCS should change 
the definition of ``limited resource producer'' to increase the gross 
farm sales and poverty level tests and thereby include a larger number 
of producers to be within the category. Commenters also asserted that 
NRCS should change the definition of ``beginning farmer'' and 
``beginning rancher'' in the interim final rule to help target the 
cost-share bonuses to individuals without large net incomes. NRCS made 
no changes based on these comments. NRCS notes that the definition of 
limited resource producers includes a yearly adjustment for inflation 
using the Prices Paid by Farmer Index as compiled by National 
Agricultural Statistical Service. Also, these are definitions used in 
other USDA programs. Moreover, NRCS believes that placing additional 
emphasis on monetary factors would be inconsistent with the statutory 
criteria which, except for the cost share rate discussed above, does 
not place emphasis for monetary payments based on income.
    The statutory provisions at 16 U.S.C. 3838a also state that 
``forested land that is an incidental part of an agricultural operation 
shall be eligible for enrollment in the conservation security 
program.'' The definition of ``incidental forest land'' at Sec.  1469.3 
stated that ``Areas of incidental forest land that are not part of a 
linear conservation practice are limited individually in size to 10 
acres or less and limited to 10 percent in congregate of the total 
offered acres.'' Commenters asserted that NRCS should remove the 
maximum parcel size requirement for eligible incidental forestland and 
increase the allowable total to 20 percent of the enrolled acreage. 
NRCS made no changes based on these comments. CSP is an agricultural 
working lands program for specifically named land uses, which does not 
include forestry. NRCS believes that such suggested changes are simply 
beyond the concept of ``incidental.''
    NRCS experience in the 2004 sign-up revealed a potential need to 
limit the total amount of incidental land eligible for payment in a 
contract. For simplicity, incidental land was included with the 
adjacent land for purposes of calculating the stewardship and existing 
practice payments. NRCS proposes to limit the amount to ten percent of 
the total contract acreage for payment purposes.
    The statutory provisions at 16 U.S.C. 3838a specify that land 
eligible for CSP includes rangeland. The regulations at Sec.  1469.3 
define rangeland to include ``areas where introduced hardy and 
persistent grasses, such as crested wheatgrass, are planted.'' 
Commenters asserted that the specific reference to acreage planted in 
crested wheatgrass should be deleted from the definition of rangeland. 
NRCS made a change based on these comments by removing the specific 
reference. NRCS did add additional examples of the types of land 
included in rangeland to be consistent with Society for Range 
Management definitions.
    Under the regulations, ``resource-conserving crop rotation'' may be 
considered for enhancement payments. The provisions of 16 U.S.C. 
3838(10) define ``resource-conserving crop rotation'' as ``a crop 
rotation that--(A) Includes at least 1 resource-conserving crop (as 
defined by the Secretary); (B) reduces erosion; (C) improves soil 
fertility and tilth; (D) interrupts pest cycles; and (E) in applicable 
areas, reduces depletion of soil moisture (or otherwise reduces the 
need for irrigation).'' Commenters asserted that NRCS should confine 
the regulatory definition of a ``resource-conserving crop rotation'' to 
the statutory wording, and make the necessary and appropriate revisions 
to the conservation practice standard for conservation crop rotation. 
Commenters also asserted that NRCS should add the following to the end 
of the definition of ``resource-conserving crops'': ``a winter annual 
oilseed crop which provides soil protection; and such other plantings, 
including non-traditional crops with substantially reduced water use 
needs, as the Secretary considers appropriate for a particular area.'' 
NRCS made no changes based on these comments. The regulations more 
closely relate the ``resource-conserving crop rotation'' to enhancement 
payments and provide examples of resource conserving crops. There are 
situations where one or more of the listed practices would provide 
additional environmental performance above the quality criteria for a 
specific resource concern. In these cases, the performance of the 
practice above the minimum criteria would qualify as an enhancement 
payment, such as the soil quality enhancement.

Section 1469.5 Eligibility Requirements

    The provisions of Sec.  1469.5 set forth eligibility requirements 
for CSP, including provisions regarding minimum level of treatment for 
water quality on cropland. These provisions state that the minimum 
treatment for water quality on cropland for Tier I and Tier II is 
considered achieved if the benchmark inventory indicates that the 
current level of treatment meets or exceeds the quality criteria 
according to the NRCS technical guides for these specific resource 
considerations: nutrients, pesticides, salinity and sediment for 
surface waters and nutrients, pesticides, and salinity for groundwater.
    NRCS determines applicants' eligibility for Tier I and Tier II by 
verifying that a producer has implemented specific conservation 
practices and activities that at least meet the agency's technical 
guides for soil and water quality standards. NRCS is considering 
options for augmenting and enhancing its ability to evaluate 
applications in order to better identify producers who are effectively 
managing their agricultural operations from an environmental 
stewardship perspective. By evaluating not only which conservation 
practices have been implemented, but also how well the practices and 
activities are performing, CSP will be able to more cost effectively 
measure and encourage beneficial conservation outcomes.
    NRCS is seeking comment on the amended eligibility provision that 
encompasses the agency's enhanced methodology for determining water 
quality performance. The amended provision states that the minimum 
level of treatment for water quality on cropland for Tier I and Tier II 
is considered achieved if the benchmark inventory indicates that the 
current level of treatment addresses the risks that nutrients, 
pesticides, sediment, and salinity present to water quality by meeting 
or exceeding the quality criteria. NRCS may determine that the quality 
criteria have been addressed both by implementing specific conservation 
practices or activities and by reducing the risks associated with 
agricultural practices to below acceptable thresholds.
    NRCS is developing risk assessment indices that measure how 
conservation activities reduce risks to human health

[[Page 15204]]

and environmental quality. These new performance-based indices measure 
water quality risk reduction for several resource concerns, including 
salinity, sediment, pesticides, and nutrients. The indices use models, 
such as WIN-PST (a quantitative tool that examines the risks caused by 
certain pesticides). With WIN-PST, NRCS can develop bundles of 
conservation practices and management techniques that address the risks 
presented by pesticides. Other examples include the Phosphorous Indexes 
and Nitrate Leaching Indexes that allow NRCS to identify water quality 
risks caused by nutrients and to develop mitigation practices to reduce 
those risks. Other models such as APEX determine sediment delivery to 
surface waters and provide information about how to mitigate these 
risks. The Irrigation Water Management Index allows for the 
determination of irrigation water management practices to address the 
risks of salinity for water quality.
    Performance indices used in CSP serve many functions including 
establishing basic program eligibility by determining if quality 
criteria have been met. In addition, they are used in calculating 
levels of performance above the minimum, and providing a gradational 
scale of performance which allows for direct environmental payment 
calculations. The Soil Conditioning Index is an example of a simple 
tool that performs all of these functions. NRCS is committed to further 
developing performance-based tools, models and associated indices that 
depict and measure environmental outcomes. It is also the agency's 
intent to use outcome-based tools for all its programs in the future to 
determine the effectiveness and impact of conservation planning and 
implementation in treating natural resource concerns. NRCS is also 
seeking comment on the potential for other performance-based indices 
for determining eligibility and assessing performance. In particular, 
NRCS is interested in public comment on indices for measuring pasture 
and rangeland management, as well as wildlife habitat management.
    Also, with respect to the minimum level of treatment for soil 
quality and water quality on cropland, NRCS has added provisions 
stating that ``The Chief may make minor exceptions to criteria for 
areas, such as tropical and tundra regions, where technology tools are 
being refined or testing is needed to review performance data.'' 
Technology tools and standards are typically developed for the majority 
of the climatic situations, but there may be areas that have unique 
resource concerns where the minimum of treatment must be adjusted to 
provide the same level of environmental performance.
    NRCS is seeking comment on the rigor of the minimum level of 
treatment for grazing lands for Tier I and Tier II. NRCS has modified 
the interim final rule to require pastureland and rangelands to have 
vegetation and animal management accomplished by following a grazing 
management plan that provides a forage-animal balance; proper livestock 
distribution; timing of use and managing livestock access to water 
courses.
    Forage and animal balance means that the total amount of available 
grazing forage and the addition of any roughage supply (hay, silage, or 
green chop) is balanced with the amount consumed by the total number of 
livestock and wildlife to meet their daily consumption needs. The 
knowledge of how much forage is available, when it is available, its 
nutritive value, and location in the agricultural operation outlines 
the design of the livestock distribution and timing of use portions of 
the grazing plan. The determination of available forage includes 
leaving an appropriate level of the plant for proper regeneration and 
reproduction. The consumption estimates includes an amount for wildlife 
species which consume herbaceous plants available in the grazing unit. 
If there is a negative balance (not enough forage) during certain times 
of the year, then the producer provides supplemental feed. If there is 
a positive balance (too much forage), the producer might take on extra 
animals during that period. In highly intensive grazing rotations, the 
animal movement and supplemental feeding may occur more than once a 
day, such as after milking. In low intensity systems, such as high 
mountain desert areas, the animal movement will be much less often and 
animals are typically managed by water, shade, and salt placement or 
herding.
    Proper timing of use prevents locating animals in overly wet 
pastures or high mountain zones to protect the soil from compaction and 
potential gully initiation. Managing the plant community addresses soil 
quality concerns and most of the water quality criteria for sediment 
and salinity and nutrient or pesticide concerns relating to runoff. 
Managing access to water courses addresses other water quality 
concerns. Depending on the topographic situation and climate, the 
grazing land might necessitate management options from fencing of 
entire stream reaches and the use of ``flash'' grazing to only fencing 
fragile areas in the desert and assuring that during the stream flow 
peaks animals are managed to be away from those areas by salt and shade 
placement. NRCS is seeking comment regarding the sufficiency of this 
minimum level of treatment for those conservation stewards to meet soil 
quality and water quality minimums as described in the rule.
    NRCS has made several modifications to the eligibility requirements 
for Tier III to further clarify the agency's expectations for the 
highest tier of participation. NRCS is clarifying that producers 
seeking to be placed in Tier III must use a resource management system 
that addresses the entire agricultural operation. NRCS believes that a 
comprehensive and operational resource management system is essential 
for meeting and documenting the eligibility requirement that all the 
applicable resource concerns are addressed in accordance with the NRCS 
quality criteria.
    NRCS has added an explicit reference to the field-based tool that 
NRCS will utilize to determine if an agricultural operation is 
addressing the wildlife resource concern. NRCS intends to rely on 
either a general or species specific habitat assessment guide as the 
basis for determining whether an index value of at least 0.5 is 
achieved. The intent of the general habitat assessment guide is to 
provide an alternative for landscapes where there is no species of 
conservation concern. The general guide evaluates the suitability of 
the types, amounts, and distribution of habitat elements that support 
diverse populations of wildlife species. The species specific habitat 
assessment guide was also included so that watersheds can assess 
conservation efforts on behalf of a single species in need of special 
assistance. The species guide evaluates the quality and quantity of 
elements such as shelter, food and water that are needed to satisfy the 
life requirements of a particular species of conservation concern. NRCS 
has determined that either assessment technique is valid and 
appropriate to document the impact of conservation activities on 
working lands.
    NRCS has added a specific eligibility requirement for Tier III 
contracts that all riparian corridors within the agricultural lands or 
incidental parcels offered for CSP contracts are buffered to restore, 
protect, and enhance riparian resources. Riparian corridors are 
essential elements of working landscapes. Practices and activities on 
agricultural lands can have a profound positive impact on riparian 
corridors, especially when they are positioned to intercept sediment, 
nutrients,

[[Page 15205]]

pesticides, and other materials in surface runoff, reduce nutrients and 
other pollutants in shallow subsurface water flow, retard stream-bank 
mass movement, and provide litter or other habitat components to 
address fish and wildlife needs. NRCS is adding this specific 
eligibility requirement to highlight the importance of riparian zone 
practices and activities in contributing to stream and river health and 
providing other benefits such as wildlife habitat.
    There are a number of conservation practices and activities that 
can be utilized to comprehensively protect riparian areas and enhance 
their function as habitat for aquatic species.
    For example, vegetative filter strips help improve water quality 
benefits and surface runoff control. Forest buffers and herbaceous 
cover promote wildlife habitat benefits. Streambank stabilization 
structures and bio-engineering actions, such as, willow-plugs help 
stabilize shorelines and reduce streambank erosion. Other practices, 
such as fencing, livestock walkways, and livestock watering facilities, 
also work in concert to protect riparian areas from degradation.
    Riparian corridor resource concerns will be included and documented 
as part of the benchmark condition inventory for Tier III contracts and 
will be included as part of any resource management system developed 
for CSP contracts transitioning to Tier III. Riparian areas that are 
enrolled in the Conservation Reserve Program and the Wetlands Reserve 
Program are not eligible for CSP payments but may be used to 
demonstrate eligibility for Tier III contracts.
    NRCS is proposing to use the NRCS Stream Visual Assessment Protocol 
(SVAP) to determine if riparian corridors have been adequately treated 
in future rulemaking. SVAP is a field technique used to evaluate the 
ecological condition of a stream and its riparian corridor. It contains 
standard evaluation elements (e.g., channel condition, hydrologic 
alteration, riparian zone, bank stability) that combine to yield an 
overall quality rating for a stream reach or other aquatic habitat. 
NRCS is considering requiring in the final rule that riparian corridors 
within agricultural operations offered for the program will meet the 
minimum eligibility criteria for Tier III if the SVAP indicates that 
50% of the habitat potential is provided. NRCS is seeking comment on 
the rigor of the minimum level of treatment for riparian corridors for 
Tier III if such a measure is used. NRCS will evaluate the use of SVAP 
during the 2005 sign-up to determine if it would be feasible to use it 
to determine minimum eligibility for Tier III.
    The CSP rewards stewards who improve and protect riparian areas 
through a wide variety of enhancement options. Producers demonstrating 
the top levels of total resource conservation, including protecting and 
enhancing riparian areas, will qualify for the highest level of CSP 
participation.
    Environmental performance and actual field based outcomes have 
proven difficult for agencies to establish and report. Typically 
agencies report progress toward achieving environmental goals as 
outputs such as acres managed (for example resource management systems 
planned or applied on grazing lands), acres created (such as wetlands), 
or permits issued (for regulatory agencies). NRCS broke through the 
performance outcome barrier with its use of the soil conditioning index 
(SCI) during the 2004 CSP sign-up. The SCI estimates the amount of net 
carbon stored in the soil and the reduction in sediment leaving the 
land on an annual basis. The enhancement payment is based on the value 
of the outcomes rather than calculated on the paradigm for cost-share 
programs--the cost of implementing an activity. Additionally NRCS is in 
the process of developing performance-based indices similar to the Soil 
Conditioning Index for the major resource concerns along with a payment 
structure that corresponds with the environmental benefit produced. 
NRCS seeks comment of this approach to enhancement payments as a basis 
for rewarding environmental performance.

Section 1469.20 Application for Contracts

    During the 2004 sign-up, NRCS recognized that despite the ``one 
contract at any one time'' provision of the regulation, this limit was 
only applied to the producer who actively managed the agricultural 
operation, and not to any other participant in the CSP contract. NRCS 
seeks to clarify that the one contract limit applies to all signatories 
to the CSP contract and is seeking comments on this interpretation 
which will be utilized in the FY 2005 sign-up. Conforming changes were 
made to the definition of ``participant'' and elsewhere in the rule to 
recognize that the CSP contract may be signed by multiple parties whom 
may not all be producers.

Section 1469.21 Contract Requirements

    Commenters asserted that clarification was needed regarding the 
contract length when a contract transitions from Tier I to a higher 
tier. The provisions of the interim final rule did not allow contracts 
to extend beyond the original five-year contract length once the 
transition to a higher tier occurred. NRCS agrees with the comments and 
has added Sec.  1469.21(d)(4) to allow for a contract adjustment once 
the transition occurs. NRCS will assure that the conservation criteria 
are met prior to the transition by conducting a field visit and review 
of those contracts.
    Commenters asserted that clarification was needed regarding the 
watershed rotational cycle. They were concerned that the watershed 
might come again into sign-up before the Tier II and Tier III 10-year 
contracts were completed. The interim final rule states in Sec.  
1469.5(b) that ``Producers who are participants in an existing 
conservation stewardship contract are not eligible to submit another 
application.'' and in Sec.  1469.20(d) that ``Producers can only have 
one active contract at any one time.'' NRCS made no changes based on 
these comments.
    Commenters requested that NRCS give the watersheds selected to 
participate in the FY 2004 pilot sign-up another chance to participate 
in the Conservation Security Program in the next year or two based on 
the argument that there was too little time allowed for the sign-ups to 
occur, contracts to be signed, and payments to be made before the end 
of the fiscal year. Additionally, sign-up occurred during harvest 
period which further decreased participation. In the May 4, 2004, 
notice on watershed process and in the preamble to the June 21, 2004, 
interim final rule NRCS discusses the benefits of a watershed rotation 
and further states, ``The watershed approach includes a rotation system 
aspect in that all watersheds will be selected once before any are 
selected for a second time.'' (69 FR 34505, June 21, 2004). 
Additionally 69 FR 24560, May 4, 2004, states, ``NRCS expects that the 
selection of different watersheds for each sign-up will result in every 
farmer and rancher being potentially eligible for CSP over the next 8 
years. No qualifying producer will be left out.''
    However, due to the concerns expressed to NRCS, the agency has 
determined that the 18 watersheds will be reopened only for new 
applicants during the 2005 sign-up. The agency is still committed to 
the established watershed rotation process and will continue to utilize 
it in subsequent

[[Page 15206]]

years. However, NRCS recognizes that there were unique circumstances in 
the program's first year and it seeks to fairly treat the farmers and 
ranchers in those first watersheds.
    The provisions of the interim final rule at Sec.  1469.21(c)(2) 
provided that to be eligible for Tier II, a participant must include 
``the treatment of an additional locally significant resource concern'' 
by the end of their contract period. This was originally included to 
assure that Tier II participants achieved additional resource benefits 
beyond the minimum level of soil and water quality. NRCS's experience 
with the 2004 sign-up revealed that this requirement may be difficult 
to implement in cases where the producer has either already addressed 
the relevant locally significant resource concerns or no locally 
significant resource concerns existed on the operation. In some cases, 
NRCS and the producers had to identify a resource concern that added 
little environmental benefit compared to its cost to fulfill this 
contract requirement.
    To ensure that CSP Tier II participants focus on significant 
resource concerns that provide substantial offsite environmental 
benefits and to streamline application review and acceptance, NRCS will 
determine, for each participating watershed, a pressing locally 
significant resource concern. Tier II applicants will only be required 
to address this concern if it is applicable to their operation and not 
already fully addressed to NRCS's quality criteria. Otherwise this 
requirement will be considered satisfied. Participants may receive 
cost-share payments for new practices required to address this resource 
concern, if offered as part of the sign-up, to assist them in 
fulfilling this contract requirement.
    The provisions of the interim final rule at Sec. Sec.  
1469.21(d)(3), 1469.23(c)(5), and 1469.24(b) required that a 
participant achieve a higher Tier for at least 12 months before 
becoming eligible for corresponding payments based on the higher Tier. 
Commenters asserted that the regulations should not impose such a 
barrier based on the argument that participants have earned the higher 
payments when they meet the requirements for a higher Tier and that 
removal of the barrier would encourage participants to obtain a higher 
Tier as soon as possible. In response, NRCS has deleted the 12-month 
requirement based on the arguments submitted by the commenters, but 
have added the provision that a field verification will be conducted by 
NRCS prior to transition to assure program compliance with the new tier 
requirement.

Section 1469.23 Program Payments

    The provisions of 16 U.S.C. 3838c(b)(3) state that payment to a 
producer shall not be provided for ``construction or maintenance of 
animal waste storage or treatment facilities or associated waste 
transport or transfer devices for animal feeding operations.'' Pursuant 
to this authority, the regulations at Sec.  1469.23(c)(3)(i) state that 
NRCS may not make new practice payments for such facilities or devices. 
Commenters asserted that the prohibitions should apply to all payment 
components and not just to the new practice component. NRCS agrees with 
the comments and has made adjustments in Sec.  1469.23(c)(3) and added 
a new subsection, Sec.  1469.23(i).
    Commenters asserted that the regulations should include feedlots in 
the stewardship payment computation. NRCS made no changes based on 
these comments. Feedlots are not a land type eligible for CSP.
    To be eligible for payments under CSP, the provisions of 16 U.S.C. 
3838a(b) require a producer to develop and submit to NRCS a 
conservation security plan. Commenters asserted these provisions should 
be utilized. NRCS made no changes based on these comments. The 
statutory term ``conservation security plan'' is more descriptively 
described in the regulations as the ``conservation stewardship plan.'' 
To be eligible for payments under CSP, the provisions of Sec.  1469.7 
require a participant to develop and submit to NRCS a conservation 
stewardship plan.
    Commenters also asserted that NRCS had abandoned the statutory 
provision giving beginning farmers a higher cost-share rate. NRCS 
considered these comments and has adjusted the section to continue the 
50 percent cost-share for new practice payments, except the cost-share 
limit is raised to 65 percent for limited resource and beginning 
producers.
    The statutory provisions at 16 U.S.C. 3838c(b)(2) constrain 
spending through a contract cap of $20,000 for Tier I, $35,000 for Tier 
II, and $45,000 for Tier III. The interim final rule also provided the 
following regulatory cap: ``The total of the stewardship component, the 
existing practice component, and the enhancement component may not 
exceed 0.15 of the stewardship payment amount without any reductions 
for Tier I, may not exceed 0.25 of the stewardship payment amount 
without any reductions for Tier II, and may not exceed 0.4 of the 
stewardship payment amount without any reductions for Tier III.'' Many 
of the commenters asserted that the payment formula should allow for 
payments without any reductions or caps and that the reduction is 
unfair to small acreage farms and dairies. NRCS agrees that the 
regulatory cap should be deleted because it disadvantaged small farms 
in areas with low rental rates.
    Specifically, NRCS was concerned that tying the enhancement payment 
to the stewardship payment penalized small operations with significant 
opportunities for enhancement activities. Accordingly, NRCS deleted the 
specific section containing the regulatory cap, but retained the 
authority of the Chief to limit payments for any component in order to 
focus funding toward targeted activities and conservation benefits the 
Chief identifies in the sign-up notice and any subsequent addenda.
    In the FY 2004 sign-up notice, NRCS used this authority to specify 
that the total annual enhancement payments per contract may not exceed 
$10,000 for Tier I, $17,500 for Tier II and $22,500 for Tier III, 
regardless of operation size. NRCS is seeking comment about the 
effectiveness of capping total enhancement payments. NRCS intends to 
cap enhancement payments in the 2005 sign-up at higher levels of 
$13,750 for Tier I, $21,875 for Tier II, and $28,125 for Tier III.
    NRCS is seeking to encourage participants to further improve their 
environmental performance through CSP. CSP allows contract payment for 
existing enhancements based on the benchmark inventory and application. 
NRCS will be requiring applicants in the 2005 sign-up to agree to a 
variable payment rate for enhancement activities that are part of the 
initial contract. The annual enhancement payment will be calculated at 
a variable payment rate with the rate initiating at 150% for the first 
contract year and then at a declining rate for the remainder of the 
contract. This will provide contract capacity to add additional 
enhancements in the out-years and will encourage participants to make 
continuous improvements to their operation. Additionally this mechanism 
will allow for a more consistent number of contracts accepted for each 
sign-up year according to the current budget projections. In order to 
maintain the same level of payment over the life of the contract, the 
participant may add additional enhancement activities of their choice. 
The variable rate would be established in the sign-up announcement. 
NRCS is seeking comment on this action. NRCS believes that with the 
changes made by this document, each of the reductions and caps will 
help create the appropriate

[[Page 15207]]

balance between allowing the largest number of participants in each of 
the categories yet providing meaningful payments (see also the 
discussion regarding payment formulas in the interim final rule at 69 
FR 34503).
    NRCS is considering including enhancement payment limits in the 
final rule. NRCS is seeking comments on whether the enhancement payment 
limits imposed in 2004 or 2005 are appropriate and whether they should 
be included in the final rule to provide more consistency and 
regulatory certainty across different sign-ups. NRCS is also seeking 
comments about the establishment of individual payment sub-caps for 
groups of enhancement activities addressing specific resource concerns 
(such as air quality, energy, etc.) to encourage participants to adopt 
a variety of enhancement activities that would target the full suite of 
resource concerns on their agricultural operations.
    Commenters asserted that enhancement payments should be adjusted to 
include maintenance costs. NRCS made no changes based on these 
comments. Enhancement components already are calculated to include 
compensation for maintenance (operation and management) in Sec.  
1469.23(d)(5)(ii). NRCS is seeking comments on the process used to 
determine the appropriate level of enhancement payments for practices 
and activities. NRCS seeks to base its enhancement payments on an 
objective measure of either adoption cost or environmental benefit. In 
some cases, especially with respect to changes in management, 
environmental benefits may be realized but the cost to the producer is 
difficult to determine. Similarly, it is not always possible to 
quantify and monetize the benefits generated by enhancement activities. 
In the cases that both are determinable, NRCS prefers to compensate 
producers based on the economic value of environmental benefits to 
recognize the environmental performance achieved by adopting a practice 
or activity. NRCS recognizes that the cost lists used to calculate 
enhancement payments are still being developed for participating 
watersheds and is seeking suggestions about the most effective and 
equitable method to determine the cost or benefits of enhancement 
activities.
    Commenters asserted that payments should be made retroactive to the 
application date. NRCS made no changes based on these comments. The CSP 
payments are made within the same fiscal year as the application is 
made and includes payment for the entire year as the first contract 
year.

Section 1469.24 Contract Modifications and Transfers of Land

    Under the provisions of Sec.  1469.24, conservation stewardship 
contracts may be modified, including modifications to add or subtract 
land to the contract. Commenters asserted that NRCS should not allow 
land to be added or subtracted once a contract is signed. They asserted 
that this is necessary to guard against program fraud and abuse. NRCS 
made no changes based on these comments. The government will be a party 
to modifications and has expertise to help avoid fraud and abuse. The 
addition and subtraction of land follows the typical flow of 
agricultural operations in American production agriculture.

Section 1469.30 Fair Treatment of Tenants and Sharecroppers

    Commenters asserted that NRCS should establish a limit for the 
landlord's share of any payments for land operated by a tenant. NRCS 
made no changes based on these comments. NRCS believes that this a 
contract issue that should be resolved between the landlord and the 
tenant.

Section 1469.31 Appeals

    The regulations at Sec.  1469.31 sets forth provisions regarding 
appeals. These provisions do not allow appeal of payment rates. 
Commenters asserted that appeals should be allowed regarding payment 
rates. NRCS made no changes based on these comments. As indicated in 
Section 1469.31, participants are not allowed to appeal matters of 
general applicability. Such appeals would affect all participants and 
would be administratively unworkable.

Executive Order 12866

    The Conservation Security Program (CSP) is a voluntary Natural 
Resources Conservation Service (NRCS) program that recognizes the 
stewardship of natural resources by farmers and ranchers on working 
lands. The CSP takes an innovative approach in that it rewards the best 
stewards of the land. Over the next 8 years, CSP will be offered to all 
eligible farmers and ranchers in the United States.

Discussion of the Economic Analysis Benefit Cost Model

    The economic analysis is based on a model that was designed to 
simulate producers' willingness to participate in CSP. The model 
includes a number of simplifying assumptions, some of which are 
discussed below. Because of the assumptions used, the model should not 
be relied on to predict actual participation rates, tier and regional 
distribution, or the magnitude of payments. 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. 
Because program implementation has only begun, the model has not been 
validated so its ability to predict program participation has not been 
assessed.
    The model provides results reflecting total participation over the 
next 15 years, rather than information on any particular year's sign-
up. Annualized values are also presented for informational purposes, 
but they represent an average over the time period covered by the 
model, rather than any particular year. A budget constraint has not 
been incorporated into the model and the results do not reflect the use 
of enrollment categories intended to comply with any such budget 
constraint.
    Farms--The model used ARMS 2002 Phase 3 data to construct 6,105 
farm types representing the 2.1 million farms in the U.S. Such farms 
are likely more numerous than the agricultural operations that may 
enroll in CSP because several ``farms'' may be operated by a single 
applicant. Additionally, the model assumes that farms as small as five 
acres will enroll in CSP. In reality, the cost of fulfilling the 
eligibility requirements and applying to the program may exceed the 
benefits for such small farms.
    Information about each representative farm includes acreage needing 
treatment (from the NRCS work load assessment database), acreage 
already treated (from the NRCS Performance and Results Measurement 
System), cost of installing practices, and county rental rates. Such 
information represents the average for the farm type and watershed in 
which each farm is located, and so may differ from the characteristics 
of actual farms enrolled in CSP. Additionally, some the data are only 
available on a statewide basis, so allocations to the watershed are 
based on the acreage covered by each land type. To the extent that 
agricultural operations in a watershed may have adopted conservation 
practices to a higher or lower degree than average, such estimates may 
not be accurate.
    Eligibility--The model includes several assumptions about the 
treatment of natural resource concerns for CSP eligibility. Due to lack 
of data, the model considered up to six resource concerns that need to 
be addressed and assumed that 1.5 selected practices per acre are 
needed to fully treat each resource concern. If different practices or 
combination of practices are needed

[[Page 15208]]

to treat resource concerns in actual agricultural operations, producers 
may be less or more likely to sign up for CSP or they may enroll in a 
different tier than predicted by the model.
    The model constructed a set of uniform decision rules to predict 
whether a producer would apply to CSP. These decision rules include:
     A return of at least seven percent on conservation costs 
to the producer during the contract,
     Minimum size farm of five acres,
     The cost of complying with eligibility requirements prior 
to enrollment cannot exceed 10 percent of annual rental rate of the 
land,
     A willingness to participate factor based on socioeconomic 
data from participants in other conservation programs,
     Tier selection that maximizes net return, and
     Producers are assumed to recognize only 25 percent of the 
onsite benefits derived from conservation practices.
    To the extent producers use a different set of decision rules or 
consider additional factors in their decision to apply to CSP, the 
model results may differ from actual participation. Note for example 
that the decision rules do not include the cost of adopting practices 
to become eligible for any enrollment categories since the categories 
were not incorporated into the model.
    Payments--The model used estimated rental rates for the purpose of 
calculating stewardship payments. In watersheds where there was no data 
on rental rates, the rates had to be imputed. The model assumes that 
only Tier II contracts or contracts transitioning to a higher tier will 
receive new practice payments. In the model for Alternatives 1 and 3, 
enhancement payments are assumed to either equal 50 percent of the 
contract statutory limit or 70 percent of the contract payment, 
whichever is less. For the baseline and Alternative 2, enhancement 
payments are assumed to either equal 50 percent of the contract 
statutory limit or the difference between the regulatory limit and the 
sum of the stewardship payments and existing practice payments. These 
constraints differ from the limits placed by NRCS either in the rule or 
in the 2004 sign-up and so the model does not reflect actual contract 
requirements. Producer costs for enhancement activities are assumed to 
be 25 percent of the enhancement payments. This may be lower or higher 
than actual costs and so may affect producers' willingness or ability 
to undertake enhancement activities.
    Benefits--Due to a lack of data, no attempt was made to estimate 
the benefits generated by the implementation of enhancement activities. 
The model results therefore show a negative net benefit for the various 
program alternatives, because enhancements activities, which constitute 
a large portion of the contracts' cost, are assigned zero benefits. It 
is likely that enhancement activities do provide significant benefits, 
and therefore the results of the model should be viewed as a lower 
threshold of expected benefits. Tables 1a-1c provide the results of 
several sensitivity analyses that use different assumptions regarding 
enhancement activities' benefits to illustrate a range of other 
potential outcomes.

Discussion of Differences Between Model and Other Program Estimates

    The benefit-cost model results differ from the estimate of the Cost 
of Program (COP) model used to predict the actual number of contracts 
that could be funded based on the President's budget baseline. The 
benefit-cost model results have a much greater participation estimate 
and lower average acres per contract. These differences occur because 
the model enrolls a greater proportion of small farms than the 
President's budget estimate which reduces the average payments per farm 
and increases the number of CSP participants. The benefit-cost model 
predicts a larger number of enrolled small farms than the President's 
budget because the model assumes that farms as small as 5 acres would 
participate, whereas in reality transaction costs may reduce 
participation of such small operations. This assumption results in a 
prediction that the average farm size would be about 200 acres. In 
contrast, the COP model using 2004 sign-up data indicates that the 
participating farm size would be about 750 acres on average. Varying 
the benefit-cost model assumption of minimum farm size has a dramatic 
effect on the benefit-cost model results. For example, increasing the 
smallest farm size to 50 acres decreases the number of farms predicted 
to enroll in CSP by the model by 40 percent and total government costs 
by 20 percent, all else being equal.
    In addition to different farm sizes, the COP model assumes both a 
constrained budget consistent with a programmatic ramp-up funding 
scenario and that only about five percent of the farms would meet the 
minimum level of treatment for CSP. These different assumptions lead 
the COP model to estimate CSP participation at about 89,000 over the 
budget cycle of ten years while the benefit cost model estimates 
participation to total about 990,000 over fifteen years for the 
baseline (similar to the 2004 Interim Final Rule) scenario. The results 
of the unconstrained benefit-cost model underscore the need to use 
enrollment categories or other means to comply with the program's 
budget.
    The COP is utilized by the agency to predict CSP participation 
using assumed budget caps within the President's budget and calculate 
the number of contracts alternative budget scenarios might fund. This 
model has assumptions that can be easily modified to reflect ever 
changing programmatic data. For example, the average acreage per 
contract and average cost per contract by tier can be estimated based 
on projections and then compared with actual sign-up data. The 
projections for the 2005 sign-up are estimated at 520 acres for a Tier 
I, 850 acres for Tier II and 1,400 acres for Tier III contracts. The 
projections for the annual average cost per existing contract are 
estimated at $6,000 for a Tier I, $12,500 for Tier II, and $26,600 for 
Tier III in FY 2005.

Discussion of Program Alternatives and Results

Baseline--No Action: The Baseline Assumes That CSP, as Implemented in 
2004 Under the Interim Final Rule, Will Continue Under the Interim 
Final Rule Conditions

    National participation in CSP under the Baseline is estimated to be 
a total of 989,000 farms (or about 47 percent of all ``farms'' across 
the U.S., as defined by the ARMS Phase 3 survey) over a fifteen year 
period. The Midwest leads all regions in number of participants with 
about 37 percent of all enrollees, followed by the Southeast (about 21 
percent) and the Northern Plains (about 14 percent). Almost eighty-
three percent of participation is estimated to be at the Tier I level; 
10 percent either at Tier II or Tier I transitioning into Tier II; and, 
about seven percent in Tier III. Over 75 percent of contract payments 
consist of enhancement payments. An estimate of the conservation 
assurance payments are found in Table 1 in the ``Baseline'' column of 
data. Eligible producers receive these payments to increase assurance 
that conservation measures will continue to provide a broad and ongoing 
stream of environmental benefits for the public. Conservation assurance 
payments may induce other farmers and ranchers to install additional 
conservation measures that further enhance environmental quality so 
that they can qualify for the CSP program.

[[Page 15209]]



                                   Table 1.--Selected Results of Modeling Alternative Program Structures, FY 2005-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Participation totals--total over entire 15 years and average annual estimates
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Difference from baseline from                                Difference from baseline
                                         Baseline--over                 baseline                Baseline--average --------------------------------------
               Tier level                   15 years    ---------------------------------------     annual \1\
                                                            Alt. 1       Alt. 2       Alt. 3                          Alt. 1       Alt. 2       Alt. 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tier 1.................................        817,617       -83,069        4,967      -78,185         272,539          -27690         1656       -26062
Tier 2.................................         73,958        -1,995       -1,809       -3,914          49,305           -1330        -1206        -2609
Tier 3.................................         66,940             0           15           15          44,626               0           10           10
Tier 1 to 2............................         27,345         1,478       -3,538       -1,950          13,673             739        -1769         -975
Tier 2 to 3............................          3,520             0         -440         -440           2,347               0         -293         -293
                                        -----------------
    Total..............................        989,380       -83,586         -804      -84,474         382,490          -28281        -1602       -29929
----------------------------------------
                                                                  Average Annual Payout
--------------------------------------------------------------------------------------------------------------------------------------------------------
               Tier level                       Dollars per year on a 7% annualized rate
                                                Dollars per year on a 3% annualized rate
----------------------------------------
Tier 1.................................          1,082          -672           -3         -674           1,006            -625           -1         -627
Tier 2.................................          2,244          -331           55         -275           2,273            -327           58         -269
Tier 3.................................          6,952           389            4          393           7,026             393            5          398
Tier 1 to 2............................          2,502        -1,233        1,478           15           2,432          -1,166        1,491          120
Tier 2 to 3............................          7,308            69          263          325           7,338              96          156          240
----------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                Location                      Millions of dollars on a 7% annualized rate
                                              Millions of dollars on a 3% annualized rate
----------------------------------------
On-site................................             72            -4           -3           -7              74              -4           -3           -7
Off-site \2\...........................             99            -9            0           -9              99              -9            0           -9
                                        -----------------
    Total Benefits.....................            171           -13           -2          -16             174             -13           -3          -17
----------------------------------------
                                                                Program Cost Information
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Costs                        Millions of dollars on a 7% annualized rate
                                              Millions of dollars on a 3% annualized rate
----------------------------------------
Producer...............................            198           -64            2          -62             127             -42            1          -41
Gov't TA...............................            115           -32            2          -30             113             -30            2          -28
Gov't FA...............................            767          -212           13         -199             750            -197           13         -184
----------------------------------------
                                              Net Benefits, Net Returns, and Conservation Assurance Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits \3\.......................           -143            82           -6           76             -66              59           -6           52
Net Returns \4\........................            641          -152            9         -144             697            -159            9         -150
Conservation Assurance Payments \5\....            569          -148           11         -137             623            -155           12        -143
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Average annual participation assumes that \1/3\ of all Tier 1 participants are enrolled in any one year: participants in other tiers are enrolled \2/
  3\ of the time due to longer contract lives.
\2\ Off-site benefits are environmental benefits.
\3\ Net benefits are total benefits less producer conservation costs less the cost of technical assistance. Financial assistance to producers is a
  benefit for producers but a cost to taxpayers and, therefore cancels out of the net benefit calculation.
\4\ Net returns represents the financial assistance plus on-site benefits less producer conservation costs.
\5\ Conservation assurance payments are considered to be payments to producers that exceed the total cost of practice installation and adoption.
  Conservation assurance payments are a cost to society, and although they are a benefit to CSP participants, they are neither a net cost nor a net
  benefit to the economy at large.

    Features Common to all Alternatives--Enhancement payments are 
limited to 50 percent of the tier specific statutory limit; however, 
the calculation of enhancement payments differs by alternatives. 
Existing practice payments are calculated as 25 percent of the total 
stewardship payments, which is consistent with the Baseline (Interim 
Final Rule or Baseline scenario above). Cost-share rates for new 
practices installed with CSP funds are assumed to be consistent with 
Environmental Quality Incentives Program (EQIP) cost share rates of 50 
percent.
    Program Alternative 1--This alternative is similar to the Interim 
Final Rule, except the enhancement payments are not calculated as the 
difference between the regulatory limit and the sum of the stewardship 
payments and existing practice payments and are instead calculated as 
70 percent limit of the total contract payment. The regulatory limit is 
not a constraint in this alternative.
    National participation under Alternative 1 registers declines in 
all regions with espe