Agricultural Management Assistance Program, 64591-64601 [E9-29070]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 74, Number 234 (Tuesday, December 8, 2009)]
[Rules and Regulations]
[Pages 64591-64601]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-29070]



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Federal Register / Vol. 74, No. 234 / Tuesday, December 8, 2009 / 
Rules and Regulations

[[Page 64591]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1465

RIN 0578-AA50


Agricultural Management Assistance Program

AGENCY: Commodity Credit Corporation, Natural Resources Conservation 
Service, United States Department of Agriculture

ACTION: Final rule.

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SUMMARY: This final rule sets forth the policies and procedures 
implementing the Agricultural Management Assistance Program (AMA). The 
Natural Resources Conservation Service (NRCS), on behalf of the 
Commodity Credit Corporation (CCC), published an interim final rule 
with request for comment on November 20, 2008 (73 FR 70245). NRCS 
issues this final rule to address public comments received during the 
60-day public comment period and to clarify policies to improve program 
implementation.

DATES: Effective Date: The rule is effective December 8, 2009.

ADDRESSES: This final rule may be accessed via the Internet at: https://www.nrcs.usda.gov/programs/farmbill/2008/, or the government-
wide rulemaking Web site: at https://www.regulations.gov, (identified by 
Docket Number NRCS-FR-09050).
    Persons with disabilities who require alternative means for 
communication (Braille, large print, audio tape, etc.) should contact 
the USDA TARGET Center at: (202) 720-2600 (voice and TDD).

FOR FURTHER INFORMATION CONTACT: Gregory Johnson, Director, Financial 
Assistance Programs Division, Natural Resources Conservation Service, 
1400 Independence Avenue, SW., Room 5241 South Building, Washington, DC 
20250; Telephone: (202) 720-1844; Fax: (202) 720-4265.

SUPPLEMENTARY INFORMATION:

Regulatory Certifications

Executive Order 12866

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

Regulatory Flexibility Act

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

Executive Order 13132

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13132, Federalism. The Department of 
Agriculture (USDA) has determined that this final rule conforms with 
the Federalism principles set forth in the Executive Order; would not 
impose any compliance costs on the States; and would not have 
substantial direct effects on the States, on the relationship between 
the Federal Government and the States, or on the distribution of power 
and responsibilities on the various levels of government. Therefore, 
USDA concludes that this final rule does not have Federalism 
implications.

Executive Order 13175

    This final rule has been reviewed in accordance with Executive 
Order 13175, Consultation and Coordination with Indian tribal 
governments. NRCS has assessed the impact of this final rule on Indian 
tribal governments and has concluded that this rule will not have 
substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal Government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian tribes.

Environmental Analysis

    The National Environmental Policy Act (NEPA) applies to ``major 
Federal actions'' where the agency has control and responsibility over 
the actions and has discretion as to how the actions will be carried 
out (40 CFR part 1508.18). Accordingly, any actions that are directed 
by Congress to be implemented in such manner that there is no 
discretion on the part of the agency are not required to undergo an 
environmental review under NEPA. The lack of discretion over the action 
by the agency undermines the rationale for NEPA review--evaluation of 
the environmental impacts of the proposed action and consideration of 
alternative actions to avoid or mitigate the impacts. Where Congress 
has directed that a specific action be implemented, and an agency has 
no discretion to consider and take alternative actions, a NEPA review 
would be moot.
    For AMA, the interim final rule noted that Congress mandated the 
addition of Hawaii to the list of States to which the Secretary of 
Agriculture is authorized to provide financial assistance. The 
Secretary is, therefore, required to make this addition to the program. 
There is no discretion on the part of the agency to take this action. 
For this reason, an environmental review of these changes under NEPA 
was not required nor prepared for the interim final rule.
    For this final rulemaking, NRCS has determined there are a few 
minor discretionary changes that should be made. The majority of these 
changes are administrative, technical, or corrections to the 
regulation. The primary change is the expansion of the definition of 
eligible lands to include those lands that are publicly owned. The 
agency believes that any potential effects from this minor change to 
the human environment have been sufficiently analyzed in the 
Programmatic Environmental Assessment (EA) and Finding of No 
Significant Impact issued for AMA on March 23, 2003, which included 
public lands in the definition of eligible lands. As a result, a new 
Programmatic EA is not warranted.

Civil Rights Impact Analysis

    NRCS has determined through a Civil Rights Impact Analysis that the 
issuance of this final rule discloses no disproportionately adverse 
impact for minorities, women, or persons with disabilities. The data 
presented indicates producers who are members of the historically 
underserved groups have participated in NRCS programs at parity with 
other producers. Extrapolating from historical participation data, it 
is reasonable to conclude that NRCS programs,

[[Page 64592]]

including AMA, will continue to be administered in a non-discriminatory 
manner. Outreach and communication strategies are in place to ensure 
all producers will be provided the same information to allow them to 
make informed compliance decisions regarding the use of their lands 
that will affect their participation in USDA programs. AMA applies to 
all persons equally regardless of race, color, national origin, gender, 
sex, or disability status. Therefore, the AMA rule portends no adverse 
civil rights implications. Copies of the Civil Rights Impact Analysis 
may be obtained from Gregory Johnson, Director, Financial Assistance 
Programs Division, Department of Agriculture, Natural Resources 
Conservation Service, 1400 Independence Avenue, SW., Room 5241 South 
Building, Washington, DC 20250.

Paperwork Reduction Act

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

Government Paperwork Elimination Act

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

Executive Order 12988

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

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

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

Unfunded Mandates Reform Act of 1995

    Pursuant to Title II of the Unfunded Mandates Reform Act of 1995, 
Public Law 104-4, NRCS assessed the effects of this rulemaking action 
on State, local, and Tribal governments, as well as the public. This 
action does not compel the expenditure of $100 million or more by any 
State, local, or Tribal governments, or anyone in the private sector, 
therefore, a statement under section 202 of the Unfunded Mandates 
Reform Act of 1995 is not required.

Discussion of Program

    The conservation provisions of AMA are administered and implemented 
under the general supervision and direction of the Chief of NRCS, who 
is a Vice President of the Commodity Credit Corporation (CCC). 
Accordingly, where NRCS is mentioned in this rule, it also refers to 
the CCC's funds, facilities, and authorities, where applicable. While 
NRCS has leadership for the conservation provisions of AMA, other 
agencies have authority for different aspects of the program. The 
Agricultural Marketing Service has responsibility for the organic 
certification cost-share program and the Risk Management Agency has 
responsibility for the insurance cost-share program for mitigation of 
financial risk.
    Through AMA, NRCS provides technical and financial assistance to 
participants in eligible States to address issues such as water 
management, water quality, and erosion control by incorporating 
conservation practices into their agricultural operations. Producers 
may construct or improve water management structures or irrigation 
structures; plant trees for windbreaks or to improve water quality; and 
mitigate risk through production diversification or resource 
conservation practices, including soil erosion control, integrated pest 
management, or organic farming.
    Section 524(b) of the Federal Crop Insurance Act, as amended by 
section 133 of the Agricultural Risk Protection Act of 2000, authorized 
AMA to provide assistance to producers in States that historically had 
low participation in the Federal Crop Insurance Program. The Farm 
Security and Rural Investment Act of 2002 made amendments to AMA 
specifying eligible States and providing additional clarity on the 
types of assistance to be made available. The original AMA regulation 
(7 CFR part 1465) was published in the Federal Register on April 9, 
2003.
    Section 2801 of the 2008 Act amended AMA to include Hawaii as an 
eligible State, and to authorize $15 million in funding each year from 
fiscal year (FY) 2008 through FY 2012. In response to these statutory 
changes, NRCS published an interim final rule with request for comment 
on November 20, 2008 (73 FR 70245). NRCS received four letters 
containing approximately one dozen comments. Respondents included two 
non-governmental organizations, one individual, and one Tribal agency. 
Comments were received from Arizona, Nebraska, Pennsylvania, and 
Wyoming. The discussion that follows is organized in the same sequence 
as the final rule.

Discussion of Comments

Section 1465.1 Purposes and Applicability

    Section 1465.1, ``Purposes and Applicability,'' sets forth AMA's 
purpose, scope, and objectives. Through AMA, NRCS provides technical 
and financial assistance to producers in statutorily-designated States. 
Section 2801 of the 2008 Act expanded AMA's geographic scope to include 
the State of Hawaii. In response, NRCS revised Sec.  1465.1 in the 
interim final rule to add Hawaii to the list of States eligible for AMA 
assistance and replaced ``15'' with the number ``16'' when referring to 
the number of eligible States. AMA is now available in Connecticut, 
Delaware, Hawaii, Maine, Maryland, Massachusetts, Nevada, New 
Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Utah, 
Vermont, West Virginia, and Wyoming. One respondent indicated his 
overall support of the AMA program, stating that AMA provides ``the 
best source of financial support that {the{time}  government has 
developed to assure continued stewardship of America's natural 
resources.'' No changes have been made in this section.

Section 1465.2 Administration

    Section 1465.2, ``Administration,'' describes the role of NRCS and 
provides a brief overview of the agency's administrative 
responsibilities. In the interim final rule NRCS amended Sec.  1465.2 
to reflect the 2003 decision made by USDA to have NRCS administer the 
AMA natural resource conservation provisions and to clarify NRCS' 
relationship with the CCC. No further changes have been made in this 
section.

Section 1465.3 Definitions

    Section 1465.3 sets forth definitions for terms used throughout 
this

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regulation. The interim final rule added or revised several definitions 
to align AMA terms with terms used by other NRCS conservation programs. 
Two respondents commented on the definitions provided in Sec.  1465.3.
    One respondent requested that the ``resource concern'' definition 
reflect the risk management aspect of AMA. NRCS has chosen to retain 
the interim final rule's definition of ``resource concern'' to keep it 
consistent with other USDA programs. As defined in Sec.  1465.3, the 
term, ``resource concern means a specific natural resource problem that 
represents a significant concern in a State or region and is likely to 
be addressed through the implementation of conservation practices by 
participants.'' Instead of addressing ``risk management'' in the 
``resource concern'' definition, NRCS addressed risk management in the 
program's purpose statement, which is located in Sec.  1465.1. As 
stated, the purpose of AMA's financial assistance funds are to: 
``Construct or improve water management structures; plant trees to form 
windbreaks or to improve water quality; and mitigate risk through 
production diversification or resource conservation practices, 
including soil erosion control, integrated pest management, or the 
transition to organic farming.''
    Another respondent requested clarification on the definition 
``Historically underserved producers'' and asked specifically whether 
producers in the Navajo Nation will be considered ``historically 
underserved producers.'' The term, ``historically underserved 
producer'' merges the term ``beginning farmer or rancher,'' ``limited 
resource farmer or rancher,'' and ``socially disadvantaged farmer or 
rancher'' to simplify terms within the AMA rule. Farmers and ranchers 
that meet one or more of these aforementioned terms -- beginning, 
limited resource, or socially disadvantaged -- are considered 
historically underserved for the purposes of AMA. Producers in the 
Navajo Nation meet the definition of ``socially disadvantaged,'' since 
in the past they have been subject to racial or ethnic prejudices 
because of their identity as a group without regard to their individual 
qualities.
    NRCS is amending the definition of ``historically underserved 
producers'' for editorial clarification to make sure it is understood 
that the definition includes nonindustrial private forest landowners. 
The definition, as amended, reads as follows: ``historically 
underserved producer means an eligible person, joint operation, or 
legal entity who is a beginning farmer or rancher, socially 
disadvantaged farmer or rancher, limited resource farmer or rancher, or 
nonindustrial private forest landowner who meets the beginning, 
socially disadvantaged, or limited resource qualifications set forth in 
Sec.  1465.3.''
    One respondent requested that NRCS compensate the respondent for 
providing programmatic support to NRCS to implement a conservation 
practice. Specifically, the respondent wanted to be compensated for 
conducting inventories and cultural resource assessments on Indian 
lands. Section 2706 of the 2008 Act amended the Food Security Act of 
1985 (1985 Act) to authorize payments to third party technical service 
providers (TSPs) for ``related technical assistance services that 
accelerate program delivery.'' Related technical assistance services 
include, but are not limited to, conservation planning documentation, 
payment scheduling and documentation, and other services like cultural 
resources inventory and assessment, which may accelerate conservation 
program delivery.
    The 2008 Act also authorized TSPs to be used to carry out the AMA 
program. For this reason and to clarify that TSPs may be used to 
expedite AMA conservation program delivery, NRCS added Sec.  1465.8 to 
the final rule to incorporate the TSP provisions used by other NRCS 
conservation programs. As in the case of Title XII conservation 
programs, an AMA participant or NRCS may use the services of a 
qualified TSP to install and implement conservation practices. 
Technical services provided may include conservation planning; cultural 
resources studies; conservation practice survey, layout, design, 
installation, and certification; information, education, and training 
for producers; and related technical assistance services as described 
above. In addition to becoming certified TSPs, Indian Tribes may also 
explore with NRCS the special sole source provisions contained in 
section 8(a) of the Small Business Administration Act or enter into one 
or more contribution agreements or cooperative agreements with NRCS to 
provide professional services.

Section 1465.4 National Priorities

    As part of the interim final rule, NRCS added Sec.  1465.4, 
``National Priorities,'' and re-designated the subsequent sections 
accordingly. The new Sec.  1465.4 establishes national priorities to 
guide State funding allocations, AMA contract selection, and 
implementation priorities for AMA conservation practices. One 
respondent requested that paragraph (c) be revised to include State 
Technical Committees in the establishment of State and local 
priorities. Section 1261 of the 1985 Act requires the Secretary of 
Agriculture to establish a technical committee in each State to assist 
the Secretary in the considerations relating to implementation and 
technical aspects of the conservation programs authorized under Title 
XII of the 1985 Act. AMA was authorized by section 524(b) of the 
Federal Crop Insurance Act, as amended, and therefore, is not a Title 
XII conservation program. Thus, State Technical Committees are not 
permitted to provide advice on AMA. However, nothing precludes a State 
Conservationist from obtaining input from particular Federal, State, 
Tribal, and local agencies when establishing State and local 
priorities. NRCS also encourages local input in Sec.  1465.20, where it 
states: ``* * * the State Conservationist will develop ranking criteria 
and a ranking process to select applications taking into account 
national, State, Tribal, and local priorities.'' No changes have been 
made in this section.

Section 1465.5 Program Requirements

     Section 1465.5, ``Program requirements,'' sets forth land and 
applicant eligibility. NRCS revised Sec.  1465.5(c)(6) of the interim 
final rule to clarify that AMA participants are subject to Adjust Gross 
Income (AGI) limitations, as set forth in the 2008 Act's amendments to 
section 1001D of the 1985 Act. The AGI and program eligibility 
requirements require NRCS to obtain from legal entities a list of 
members, including members in embedded entities, along with their 
social security numbers and percent interest in the legal entity. One 
respondent requested that a waiver process be implemented so that a 
contract can proceed if substantially all members of the legal entity 
are listed. NRCS is bound by section 1001D(b)(2)(A)(i) of the 1985 Act, 
as amended, which states that a person or legal entity will not be 
eligible to receive a conservation program payment, such as an AMA 
payment, if the average adjusted gross income exceeds $1,000,000, 
unless not less than 66.66 percent of the average adjusted gross income 
of the person or legal entity is average adjusted gross farm income. 
The statutory language did not place any exemptions or waiver authority 
based on the involvement of members within a legal entity. As a result, 
an applicant is required to list all members of a legal entity. 
Specifically, text has been added to Sec.  1465.5,

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``program requirements,'' that requires participants to ``supply other 
information, as required by NRCS, to determine payment eligibility as 
established by 7 CFR part 1400.'' Paragraph (6) has also been added to 
clarify policies related to Indian Tribes or Indians represented by the 
Bureau of Indian Affairs (BIA), and paragraphs (7) through (11) have 
been renumbered accordingly.
    One respondent supported the inclusion of publicly-owned land as 
eligible land. With this in mind, and in an effort to be consistent 
with other USDA conservation programs, NRCS amends the AMA regulation 
and removes the requirement that the benefit of the conservation 
practice on public land address an identified resource concern that is 
on private land. NRCS has determined that the AMA statute should not be 
interpreted so narrowly to preclude the ability of producers to enroll 
part of their overall agricultural or forestry operation simply because 
the resource concerns exist on publically owned land. USDA considers 
these lands to be part of the producer's operation if it is a working 
component of the private agricultural operation. Therefore, NRCS is 
issuing this final rule that modifies the AMA regulation to authorize 
an AMA contract to include conservation practices that address an 
identified resource concern on public land where a participant manages 
such lands as a working component of their agricultural or forestry 
operation, and the participant has control of the land for the term of 
the AMA contract.

Section 1465.6 AMA Plan of Operations

    Section 1465.6, ``AMA plan of operations,'' describes the AMA plan 
of operations (APO) as the document that contains the information 
related to practices and activities to be implemented under AMA. 
Section 1465.6 also specifies the requirements for the APO and that 
participants are responsible for implementing them. No changes have 
been made in this section.

Section 1465.7 Conservation Practices

    Section 1465.7, ``Conservation practices,'' describes how NRCS 
determines eligible conservation practices. No changes have been made 
in this section.

Section 1465.8 Technical Services Provided by Qualified Personnel Not 
Affiliated With USDA

    Section 1465.8, ``Technical services provided by qualified 
personnel not affiliated with USDA,'' has been added to the final rule 
to address the use of TSPs by NRCS and AMA participants.

Subpart B--Contracts

Section 1465.20 Application for Participation and Selecting 
Applications for Contracting

    Section 1465.20, ``Application for participation and selecting 
applications for contracting,'' describes the processes for submitting 
and selecting applications. In the interim final rule, NRCS removed the 
reference to State Technical Committees providing advice on AMA ranking 
criteria, since State Technical Committees are permitted only to 
provide advice on conservation programs authorized by Title XII of the 
1985 Act. While the respondent accepted NRCS' rationale for removing 
State Technical Committees from the criteria development process, the 
respondent suggested that language be included that requires 
consultation with the State conservation agencies and local 
conservation districts. NRCS retains paragraphs (c) and (d) of Sec.  
1465.20 which states that the State Conservationist will develop 
ranking criteria using a locally-led process that takes into account 
National, State, Tribal, and local priorities. No changes have been 
made in this section.

Section 1465.21 Contract Requirements

    Section 1466.21, ``Contract requirements,'' identifies elements 
contained within an AMA contract and the responsibilities of the 
participant who is party to the AMA contract. No changes have been made 
in this section.

Section 1465.22 Conservation Practice Operation and Maintenance

    Section 1465.22, ``Conservation practice operation and 
maintenance,'' addresses the participant's responsibility for operating 
and maintaining conservation practices. To further clarify a 
participant's obligations, NRCS added paragraph (e) to this section to 
specify that if a participant is not operating and maintaining 
practices during the contract period, NRCS may terminate and request a 
refund of payments made for that conservation practice under the 
contract.

Section 1465.23 Payments

    Section 1465.23, ``Payments,'' addresses payments and payment 
limitations applicable to a participant. NRCS revised paragraph (a) in 
the interim final rule to allow payments of ``up to 75 percent of the 
estimated cost of an eligible practice and up to 100 percent of the 
estimated income foregone'' rather than providing a flat rate of 75 
percent. Allowing for a range of payment rates makes it possible to 
provide reduced rates where participants can implement a conservation 
practice at a lower cost. This allows the opportunity to distribute AMA 
funds to more participants. Two respondents supported NRCS' policy to 
pay up to 75 percent of the estimated incurred cost or up to 100 
percent of the estimated income foregone and distributing the money to 
more participants. One respondent requested that NRCS utilize actual 
costs when determining income foregone and that the approach used in 
evaluating income foregone should be consistent. NRCS defines income 
foregone as ``the annual net income lost from a change in land use, or 
land taken out of production, or the opportunity cost of accepting less 
farm income in exchange for improved resource conditions due to the 
practice.'' An income foregone payment may be based on crop yield 
losses associated with implementing the practice. For example, this 
type of payment calculation may apply to a filter strip practice. To 
establish a filter strip, land is taken out of crop production and 
planted to an herbaceous cover. The participant will no longer have 
income from crops on this land or the costs associated with crop 
production. The costs associated with crop production would be 
subtracted from the normal crop income received from the area to 
determine annual estimated income foregone.

Section 1465.24 Contract Modifications, Extensions, and Transfers of 
Land

    Section 1465.24, ``Contract modifications, extensions, and 
transfers of land,'' addresses contract modifications, changes in land 
ownership or control of the land, and contract implications if the 
participant loses control of the land. One respondent specifically 
supported NRCS' addition of paragraph (f) in the interim final rule to 
ensure that in the event a conservation practice fails through no fault 
of the participant, the State Conservationist may issue payments to re-
establish the conservation practice in accordance with established 
payment rates and limitations. No changes have been made in this 
section.

Section 1465.25 Contract Violations and Terminations

    Section 1465.25, ``Contract violations and terminations,'' 
addresses the procedures that NRCS takes where a violation has occurred 
or a contract

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termination is necessary. One respondent has requested that NRCS 
further clarify or define the type and extent of documentation that may 
be necessary to demonstrate hardship claims. NRCS has chosen to further 
define examples of hardship in its policy in part 512 of Title 440 of 
the Conservation Programs Manual (440 CPM 512). Documentation varies 
upon the type of hardship incurred. Examples of hardship may include, 
but not be limited to, natural disasters (e.g., drought, hurricanes, 
tornadoes, hail, and pest infestations); farm or ranch buildings and 
equipment destruction; major illness; death; bankruptcy; or public 
interest (e.g., military service, public utilities easement or 
condemnation, and environmental and archeological concerns).

Subpart C--General Administration

Section 1465.30 Appeals

    Section 1465.30, ``Appeals,'' references the policies that govern 
when a producer seeks an appeal to an adverse decision made by NRCS. No 
changes have been made in this section.

Section 1465.31 Compliance With Regulatory Measures

    Section 1465.31, ``Compliance with regulatory measures,'' specifies 
that the program participant is responsible for ensuring compliance 
with regulatory measures. No changes have been made in this section.

Section 1465.32 Access to Operating Unit

    Section 1465.32, ``Access to operating unit,'' provides notice to 
applicants, participants, and the public that NRCS has the right to 
enter an operating unit or tract for the purpose of ascertaining the 
accuracy of any representations related to contract performance. 
Specifically, Sec.  1465.32 was amended in the interim final rule to 
notify potential AMA applicants that an authorized NRCS representative 
may enter an agricultural operation for the purposes of eligibility 
determinations. NRCS will continue to provide the participant notice 
prior to entering the property. One respondent supported this policy, 
stating that it was important for NRCS to contact the participant prior 
to exercising the right to access the property to maintain a positive 
working relationship between the agency and the producer. NRCS concurs 
with this rationale and has further clarified this policy in the AMA 
contract to make NRCS and the participant's contract obligations more 
transparent.

Section 1465.33 Equitable Relief

    Section 1465.33, ``Equitable relief,'' outlines the policy when a 
participant relies upon erroneous advice provided by NRCS or when a 
participant who is in violation of a program provision is determined to 
have made a good faith effort to comply with the terms of 
participation. One respondent supported NRCS' policy on equitable 
relief. No changes have been made in this section.

Section 1465.34 Offsets and Assignments

    Section 1465.34, ``Offsets and assignments,'' governs offsets and 
withholdings, as well as assignment of payments. No changes have been 
made in this section.

Section 1465.35 Misrepresentation and Scheme or Device

    Section 1465.35, ``Misrepresentation and scheme and device,'' 
outlines the policies governing producers who have erroneously or 
fraudulently represented themselves. No changes have been made in this 
section.

Section 1465.36 Environmental Services Credits for Conservation 
Improvements

    Section 1465.36, ``Environmental services credits for conservation 
improvements,'' provides policies related to AMA participants who are 
interested in entering into agreements on land subject to an AMA 
agreement. NRCS made minor changes to this section to clarify the 
policy.

List of Subjects in 7 CFR Part 1465

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


0
For the reasons stated in the preamble, the Natural Resources 
Conservation Service, on behalf of the Commodity Credit Corporation, 
amends 7 CFR Chapter XIV by revising part 1465 to read as follows:

PART 1465--AGRICULTURAL MANAGEMENT ASSISTANCE

Subpart A--General Provisions
Sec.
1465.1 Purposes and applicability.
1465.2 Administration.
1465.3 Definitions.
1465.4 National priorities.
1465.5 Program requirements.
1465.6 AMA plan of operations.
1465.7 Conservation practices.
1465.8 Technical services provided by qualified personnel not 
affiliated with USDA.
Subpart B--Contracts
1465.20 Applications for participation and selecting applications 
for contracting.
1465.21 Contract requirements.
1465.22 Conservation practice operation and maintenance.
1465.23 Payments.
1465.24 Contract modifications, extensions, and transfers of land.
1465.25 Contract violations and terminations.
Subpart C--General Administration
1465.30 Appeals.
1465.31 Compliance with regulatory measures.
1465.32 Access to operating unit.
1465.33 Equitable relief.
1465.34 Offsets and assignments.
1465.35 Misrepresentation and scheme or device.
1465.36 Environmental services credits for conservation 
improvements.

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

Subpart A--General Provisions


Sec.  1465.1  Purposes and applicability.

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


Sec.  1465.2  Administration.

    (a) Administration and implementation of AMA's conservation 
provisions for the Commodity Credit Corporation (CCC) is assigned to 
NRCS, using the funds, facilities, and authorities of the CCC. 
Accordingly, where NRCS is mentioned in this part, it also refers to 
the CCC's funds, facilities, and authorities, where applicable.
    (b) NRCS will:
    (1) Provide overall management and implementation leadership for 
AMA;
    (2) Establish policies, procedures, priorities, and guidance for 
implementation;
    (3) Establish payment limits;
    (4) Determine eligible practices;
    (5) Develop and approve AMA plans of operation and contracts with 
selected participants;

[[Page 64596]]

    (6) Provide technical leadership for implementation, quality 
assurance, and evaluation of performance;
    (7) Make AMA allocation and contract funding decisions; and
    (8) Issue payments for completed conservation practices.
    (c) No delegation in this part to lower organizational levels will 
preclude the Chief of NRCS from determining any issues arising under 
this part or from reversing or modifying any determination made under 
this part.


Sec.  1465.3  Definitions.

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

[[Page 64597]]

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


Sec.  1465.4  National priorities.

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


Sec.  1465.5  Program requirements.

    (a) Participation in AMA is voluntary. The participant, in 
cooperation with the local conservation district, applies for practice 
installation for the agricultural operation. NRCS provides payments 
through contracts to apply needed conservation practices within a time 
schedule specified in the APO.
    (b) The Chief determines the funds available for financial 
assistance according to the purpose and projected cost for which the 
financial assistance is provided in a fiscal year. The Chief allocates 
the funds available to carry out AMA in consideration of national 
priorities established under Sec.  1465.4.
    (c) To be eligible to participate in AMA, an applicant must:
    (1) Own or operate an agricultural operation within an applicable 
State, as listed in 1465.1;
    (2) Provide NRCS with written evidence of ownership or legal 
control for the life of the proposed contract, including the O&M 
agreement. An exception may be made by the Chief:
    (i) In the case of land allotted by the BIA, Tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control; or
    (ii) If the applicant is a tenant of the land involved in 
agricultural production, the applicant will provide NRCS with the 
written concurrence of the landowner in order to apply a structural 
practice(s);
    (3) Submit an application form NRCS-CPA-1200;
    (4) Agree to provide all information to NRCS determined to be 
necessary to assess the merits of a proposed project and to monitor 
contract compliance;
    (5) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment;
    (6) With regard to contracts with Indian Tribes or Indians 
represented by the BIA, payments if a BIA or Tribal official certify in 
writing that no one individual, directly or indirectly, will receive 
more than the payment limitation. The Tribal entity must also provide, 
annually, a listing of

[[Page 64598]]

individuals and payments made by social security or tax identification 
number or other unique identification number, during the previous year 
for calculation of overall payment limitations. The BIA or Tribal 
entity must also provide, at the request of NRCS, proof of payments 
made to the person or legal entity that incurred costs or sacrificed 
income related to conservation practice implementation.
    (7) Supply other information, as required by NRCS, to determine 
payment eligibility as established by 7 CFR part 1400, Adjusted Gross 
Income;
    (8) With regard to any participant that utilizes a unique 
identification number as an alternative to a tax identification number, 
the participant will utilize only that identifier for any and all other 
AMA contracts to which the participant is a party. Violators will be 
considered to have provided fraudulent representation and be subject to 
full penalties of Sec.  1465.25;
    (9) States, political subdivisions, and entities thereof will not 
be persons eligible for payment. Any cooperative association of 
producers that markets commodities for producers will not be considered 
to be a person eligible for payment;
    (10) Be in compliance with the terms of all other USDA-administered 
conservation program agreements to which the participant is a party; 
and
    (11) Develop and agree to comply with an APO and O&M agreement, as 
described in Sec.  1465.3.
    (d) Land may only be considered for enrollment in AMA if NRCS 
determines that the land is:
    (1) Privately owned land;
    (2) Publicly owned land where:
    (i) The land is a working component of the participant's 
agricultural and forestry operation; and
    (ii) The participant has control of the land for the term of the 
contract; and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern; or
    (3) The land is Indian land.


Sec.  1465.6  AMA plan of operations.

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


Sec.  1465.7  Conservation practices.

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


Sec.  1465.8  Technical services provided by qualified personnel not 
affiliated with USDA.

    (a) NRCS may use the services of qualified TSPs in performing its 
responsibilities for technical assistance.
    (b) Participants may use technical services from qualified 
personnel of other Federal, State, local agencies, Indian Tribes, or 
individuals who are certified as TSPs by NRCS.
    (c) Technical services provided by qualified personnel not 
affiliated with USDA may include, but are not limited to: conservation 
planning; conservation practice survey, layout, design, installation, 
and certification; and information, education, and training for 
producers, and related technical services as defined in 7 CFR part 652.
    (d) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving AMA payments.

Subpart B--Contracts


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

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


Sec.  1465.21  Contract requirements.

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

[[Page 64599]]

conservation practices consistent with the provisions of Sec.  1465.22; 
and
    (5) Specify any other provision determined necessary or appropriate 
by NRCS.
    (c) The participant must apply the practice(s) according to the 
schedule set out in the APO.


Sec.  1465.22  Conservation practice operation and maintenance.

    (a) The contract will incorporate the O&M agreement that addresses 
the operation and maintenance of the conservation practices applied 
under the contract.
    (b) NRCS expects the participant to operate and maintain each 
conservation practice installed under the contract for its intended 
purpose for the conservation practice lifespan as specified in the O&M 
agreement.
    (c) NRCS may periodically inspect the conservation practice(s) 
during the contract duration to ensure that operation and maintenance 
requirements are being carried out, and that the conservation practice 
is fulfilling its intended objectives.
    (d) Conservation practices installed before the contract execution, 
but included in the contract to obtain the environmental benefits 
agreed upon, must be operated and maintained as specified in the 
contract and O&M agreement.
    (e) If NRCS finds during the contract that a participant is not 
operating and maintaining practices in an appropriate manner, NRCS may 
terminate and request a refund of payments made for that conservation 
practice under the contract.
    (f) In the event a conservation practice fails through no fault of 
the participant, the State Conservationist may issue payments to re-
establish the conservation practice, at the rates established in 
accordance with Sec.  1465.23, provided such payments do not exceed the 
payment limitation requirements as set forth in Sec.  1465.23.


Sec.  1465.23  Payments.

    (a) The Federal share of payments to a participant will be:
    (1) Up to 75 percent of the estimated incurred cost or 100 percent 
of the estimated income foregone of an eligible practice, except as 
provided in (a)(2) of this section.
    (2) In the case of historically underserved producers, the payment 
rate will be the applicable rate and an additional rate that is not 
less than 25 percent above the applicable rate, provided that this 
increase does not exceed 90 percent of the estimated incurred costs or 
estimated income foregone.
    (3) In no instance will the total financial contributions for an 
eligible practice from other sources exceed 100 percent of the 
estimated incurred cost of the practice.
    (b) Participants may contribute their portion of the estimated 
costs of practices through in-kind contributions, including labor and 
materials, providing the materials contributed meet the NRCS standard 
and specifications for the practice being installed.
    (c) Payments for practices applied prior to application or contract 
approval--
    (1) Payments will not be made to a participant for a conservation 
practice that was applied prior to application for the program.
    (2) Payments will not be made to a participant for a conservation 
practice that was initiated or implemented prior to contract approval, 
unless the participant obtained a waiver from the State 
Conservationist, or designated conservationist, prior to practice 
implementation.
    (d) The total amount of payments paid to a person or legal entity 
under this part may not exceed $50,000 for any fiscal year.
    (e) For purposes of applying the payment limitations provided for 
in this section, NRCS will use the provisions in 7 CFR part 1400, 
Payment Limitation and Payment Eligibility.
    (f) A participant will not be eligible for payments for 
conservation practices on eligible land if the participant receives 
payments or other benefits for the same practice on the same land under 
any other conservation program administered by USDA.
    (g) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before NRCS will 
approve any payment.
    (h) Subject to fund availability, the payment rates for 
conservation practices scheduled after the year of contract obligation 
may be adjusted to reflect increased costs.


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

    (a) The participant and NRCS may modify a contract if both parties 
agree to the contract modification, the APO is revised in accordance 
with NRCS requirements, and the designated conservationist approves the 
modified contract.
    (b) It is the participant's responsibility to notify NRCS when he 
or she either anticipates the voluntary or involuntary loss of control 
of the land.
    (c) The participant and NRCS may mutually agree to transfer a 
contract to another party.
    (1) To receive an AMA payment, the transferee must be determined by 
NRCS to be eligible to participate in AMA and will assume full 
responsibility under the contract, including the O&M agreement for 
those conservation practices already installed and those conservation 
practices to be installed as a condition of the contract.
    (2) With respect to any and all payment owed to participants who 
wish to transfer ownership or control of land subject to a contract, 
the division of payment will be determined by the original party and 
the party's successor. In the event of a dispute or claim on the 
distribution of payments, NRCS may withhold payments without the 
accrual of interest pending a settlement or adjudication on the rights 
to the funds.
    (d) NRCS may require a participant to refund all or a portion of 
any assistance earned under AMA if the participant sells or loses 
control of the land under an AMA contract, and the successor in 
interest is not eligible or refuses to accept future payments to 
participate in the AMA or refuses to assume responsibility under the 
contract.
    (e) The contract participants will be jointly and severally 
responsible for refunding the payments with applicable interest 
pursuant to paragraph (d) of this section.


Sec.  1465.25  Contract violations and termination.

    (a) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or other documents incorporated 
into the contract, NRCS will give the participant notice and 60 days, 
unless otherwise determined by the State Conservationist, to correct 
the violation and comply with the terms of the contract and attachments 
thereto. If a participant continues in violation, the State 
Conservationist may terminate the AMA contract.
    (b) Notwithstanding the provisions of (a) of this section, a 
contract termination will be effective immediately upon a determination 
by the State Conservationist that the participant has submitted false 
information or filed a false claim, or engaged in any act, scheme, or 
device for which a finding of ineligibility for payments is permitted 
under the provisions of Sec.  1465.35, or in a case in which the 
actions of the party involved are deemed to be sufficiently purposeful 
or negligent to warrant a termination without delay.
    (c) If NRCS terminates a contract, the participant will forfeit all 
rights to future payments under the contract and refund all or part of 
the payments received, plus interest. Participants

[[Page 64600]]

violating AMA contracts may be determined ineligible for future NRCS-
administered conservation program funding.
    (1) The State Conservationist may require only a partial refund of 
the payments received if the State Conservationist determines that a 
previously installed conservation practice can function independently 
and is not affected by the violation or the absence of other 
conservation practices that would have been installed under the 
contract.
    (2) If NRCS terminates a contract due to breach of contract, or the 
participant voluntarily terminates the contract before any contractual 
payments have been made, the participant will forfeit all rights for 
further payments under the contract and will pay such liquidated 
damages as prescribed in the contract. The S