Federal Register: June 3, 2010 (Volume 75, Number 106)
DOCID: fr03jn10-15 FR Doc 2010-12699
DEPARTMENT OF AGRICULTURE
U.S. Citizenship and Immigration Services
CFR Citation: 7 CFR Part 1470
RIN ID: RIN 0578-AA43
NOTICE: Part III
DOCID: fr03jn10-15
DOCUMENT ACTION: Final rule.
SUBJECT CATEGORY:
Conservation Stewardship Program
DATES: Effective Date: The rule is effective June 3, 2010.
DOCUMENT SUMMARY:
Section 2301 of the Food, Conservation, and Energy Act of 2008 (2008 Act) amended the Food Security Act of 1985 to establish the Conservation Stewardship Program (CSP). On July 29, 2009, the Natural Resources Conservation Service (NRCS) published an interim final rule for CSP with a 60day public comment period. On September 21, 2009, the public comment period was extended 30 days. NRCS is publishing a final rule that addresses the comments received on the interim final rule and makes other minor adjustments to improve clarity of the rule.
SUMMARY:
Agriculture Department, Commodity Credit Corporation
SUPPLEMENTAL INFORMATION
Regulatory Certifications
Executive Order 12866
Pursuant to Executive Order 12866 (FR Doc. 9324523, September 30, 1993), this final rule is an economically significant regulatory action since it results in an annual effect on the economy of $100 million or more. The administrative record is available for public inspection at the Department of Agriculture, 1400 Independence Avenue, SW., Room 5242 South Building, Washington, DC 20250.
Pursuant to Executive Order 12866, NRCS conducted an economic analysis of the potential impacts associated with this program. A summary of the economic analysis can be found at the end of the Regulatory Certifications section of this preamble and a copy of the analysis is available upon request from Dwayne Howard, Branch Chief, Financial Assistance Programs Division, Department of Agriculture, Natural Resources Conservation Service, Room 5237 South Building, Washington, DC 20250 or electronically at http://www.nrcs.usda.gov/ programs/csp/ under the CSP Rules and Notices with Supporting Documents title.
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. Environmental Analysis
Availability of the Environmental Assessment (EA) and Finding of No Significant Impact (FONSI). A programmatic environmental assessment was prepared in association with the CSP interim final rule. The analysis determined that there was not a significant impact to the human environment and as a result an Environmental Impact Statement was not required to be prepared (40 CFR part 1508.13). The EA and FONSI were available for review and comment for 30 days from the date the interim final rule was published in the Federal Register.
For this final rulemaking, the agency has determined that there are no new circumstances or significant new information that has a bearing on environmental effects which warrant supplementing the previous EA and FONSI. The proposed changes identified in this final rule are considered minor changes that should be implemented for the program. The majority of these changes are administrative or technical or corrections to the regulation.
Copies of the EA and FONSI may be obtained from Matt Harrington, National Environmental Coordinator, Ecological Sciences Division, Department of Agriculture, Natural Resources Conservation Service, 1400 Independence Avenue, SW., Room 6151 South Building, Washington, DC 20250. The CSP EA and FONSI are also available at the following Internet address: http://www.nrcs.usda.gov/programs/Env_Assess. Civil Rights Impact Analysis
NRCS has determined through a Civil Rights Impact Analysis (CRIA) that the interim final rule discloses no disproportionately adverse impacts for minorities, women, or persons with disabilities. The final CRIA provides responses to the interim final rule's CRIA comments. The Department of Agriculture (USDA), Office of Assistant Secretary for Civil Rights (OASCR), Office of Compliance, Policy, and Training (formally the Office of Adjudication and Compliance) worked with NRCS in the initial preparation of the proposed interim final rule and CRIA. Based on these preliminary meetings and their review, it was determined there was no adverse impact. The OASCR concurred with the CRIA for the proposed final rule.
The data presented indicates producers who are members of the protected groups have participated in NRCS conservation programs at parity with other producers. Extrapolating from historical participation data, it is reasonable to conclude that NRCS programs, including CSP, will continue to be administered in a nondiscriminatory manner. Outreach and communication strategies are in place to ensure all producers will be provided the same information to allow them to make informed compliance decisions regarding the use of their lands that will affect their participation in USDA programs. CSP applies to all persons equally regardless of their race, color, national origin, gender, sex, or disability status. Therefore, the CSP rule portends no adverse civil rights implications for women, minorities, and persons with disabilities.
Paperwork Reduction Act
Section 2904 of the 2008 Act provides that the promulgation of regulations and the administration of Title II of the 2008 Act, which contain the amendments that authorize CSP, will be made without regard to chapter 35 of Title 44 of the U.S.C. also known as the Paperwork Reduction Act. Therefore, NRCS is not reporting recordkeeping or estimated paperwork burden associated with this interim final rule. Government Paperwork Elimination Act
NRCS is committed to compliance with the Government Paperwork Elimination Act, which requires government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. To better accommodate public access, NRCS has developed an online application and information system for public use.
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. The provisions of this final rule preempt State
and local laws to the extent that such laws are inconsistent with this [[Page 31611]]
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 614, 780, and 11 must be exhausted.
Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994
Section 304 of the Department of Agriculture Reorganization Act of 1994, Public Law 103354, requires that a risk assessment be prepared in conjunction with any notice of proposed rulemaking for a major regulation. Pursuant to section 2904 of the 2008 Act, NRCS is promulgating this final rule, and therefore, a risk assessment is not required. However, risks associated with the final rule have been assessed pursuant to the analysis prepared in compliance with Executive Order 12866.
Unfunded Mandates Reform Act of 1995
NRCS assessed the effects of this rulemaking action on State, local, and tribal governments, and the public. This action does not compel the expenditure of $100 million or more by any State, local, or tribal governments, or anyone in the private sector; therefore, a statement under section 202 of the Unfunded Mandates Reform Act of 1995 is not required.
Executive Order 13132
This final rule has been reviewed in accordance with the requirements of Executive Order 13132, Federalism. 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 the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. NRCS has assessed the impact of this final rule on Indian tribal governments and concluded that this final rule will not negatively affect Indian tribal governments or their communities. The rule neither imposes substantial direct compliance costs on tribal governments nor preempts tribal law. However, NRCS plans to undertake a series of at least six regional tribal consultation sessions before December 30, 2010, on the impact of NRCS conservation programs and services on tribal governments and their members to establish a baseline of consultation for future actions. Reports from these sessions will be made part of the USDA annual reporting on Tribal Consultation and Collaboration. NRCS will respond in a timely and meaningful manner to all tribal governments' requests for consultation.
Small Business Regulatory Enforcement Fairness Act of 1996
Section 2904(c) of the 2008 Act requires that the Secretary use the authority in section 808(2) of title 5 U.S.C., which allows an agency to forgo the Small Business Regulatory Enforcement Fairness Act of 1996 usual congressional review delay of the effective date of a regulation if the agency finds that there is a good cause to do so. NRCS hereby determines that it has good cause to do so in order to meet the congressional intent to have the conservation programs authorized or amended by Title II in effect as soon as possible. Accordingly, this rule is effective upon filing for public inspection by the Office of the Federal Register.
Section 2708 of the 2008 Act
Section 2708, ``Compliance and Performance,'' of the 2008 Act added
a paragraph to section 1244(g) of the Food Security Act of 1985 Act
entitled, ``Administrative Requirements for Conservation Programs,'' which states the following:
``(g) Compliance and performance.For each conservation program under Subtitle D, the Secretary will develop procedures
(1) To monitor compliance with program requirements;
(2) To measure program performance;
(3) To demonstrate whether longterm conservation benefits of the program are being achieved;
(4) To track participation by crop and livestock type; and
(5) To coordinate activities described in this subsection with the
national conservation program authorized under section 5 of the Soil
and Water Resources Conservation Act of 1977 (16 U.S.C. 2004).''
This new provision presents in one place the accountability requirements placed on the agency as it implements conservation programs and reports on program results. The requirements apply to all programs under Subtitle D, including the Wetlands Reserve Program, Conservation Security Program, Conservation Stewardship Program, Farm and Ranch Lands Protection Program, Grassland Reserve Program (GRP), Environmental Quality Incentives Program (EQIP) (including the Agricultural Water Enhancement Program), Wildlife Habitat Incentive Program (WHIP), and Chesapeake Bay Watershed initiative. These requirements are not directly incorporated into these regulations which set out requirements for program participants. However, certain provisions within these regulations relate to elements of section 1244(g) of the Food Security Act of 1985 Act and the agency's accountability responsibilities regarding program performance. NRCS is taking this opportunity to describe existing procedures that relate to meeting the requirements of section 1244(g) of the Food Security Act of 1985, and agency expectations for improving its ability to report on each program's performance and achievement of longterm conservation benefits. Also included is reference to the sections of these regulations that apply to program participants and that relate to the agency accountability requirements as outlined in section 1244(g) of the Food Security Act of 1985.
Monitor compliance with program requirements. NRCS has established application procedures to ensure that participants meet eligibility requirements and followup procedures to ensure that participants are complying with the terms and conditions of their contractual arrangement with the government and that the installed conservation measures are operating as intended. These and related program compliance evaluation policies are set forth in agency guidance (Conservation Programs Manual440Part 512 and Conservation Programs Manual 440Part 508) (http://directives.sc.egov.usda.gov/). The program requirements applicable to participants that relate to compliance are set forth in these regulations in Sec. 1470.6 ``Eligibility requirements,'' Sec. 1470.21 ``Contract requirements,'' Sec. 1470.22 ``Conservation stewardship plan,'' and Sec. 1470.23 ``Conservation activity operation and maintenance.'' These sections make clear the general program eligibility requirements, participant obligations for implementing a conservation stewardship plan, contract obligations, and requirements for operating and maintaining CSPfunded conservation activities.
Measure program performance. Pursuant to the requirements of the
Government Performance and Results Act of 1993 (Pub. L. 10362, Sec. 1116) and guidance provided by Office of
[[Page 31612]]
Management and Budget Circular A11, NRCS has established performance
measures for its conservation programs. Programfunded conservation
activity is captured through automated fieldlevel business tools, and
the information is available to the public at http://
ias.sc.egov.usda.gov/PRSHOME/. Program performance is also reported
annually to Congress and the public through the annual performance
budget, annual accomplishments report, and the USDA Performance
Accountability Report. Related performance measurement and reporting
policies are set forth in agency guidance (GM340401 and GM340
403) (http://directives.sc.egov.usda.gov/).
The conservation actions undertaken by participants are the basis for measuring program performance; specific actions are tracked and reported annually, while the effects of those actions relate to whether the longterm benefits of the program are being achieved. The program requirements applicable to participants that relate to undertaking conservation actions are set forth in these regulations in Sec. 1470.21 ``Contract requirements,'' Sec. 1470.22 ``Conservation stewardship plan,'' and Sec. 1470.23 ``Conservation activity operation and maintenance.'' These sections make clear participant obligations for installing, adopting, improving, maintaining, and managing conservation stewardship activities which in aggregate result in the program performance that is reflected in agency performance reports.
Demonstrating the longterm natural resource benefits achieved through conservation programs is subject to the availability of needed data, the capacity and capability of modeling approaches, and the external influences that affect actual natural resource condition. While NRCS captures many measures of ``output'' data, such as acres of conservation practices, it is still in the process of developing methods to quantify the contribution of those outputs to environmental outcomes.
NRCS currently uses a mix of approaches to evaluate whether long
term conservation benefits are being achieved through its programs.
Since 1982, NRCS has reported on certain natural resource status and
trends through the National Resources Inventory (NRI), which provides
statistically reliable, nationally consistent land cover/use and
related natural resource data. However, lacking has been a connection
between these data and specific conservation programs.\1\ In the
future, the interagency Conservation Effects Assessment Project (CEAP),
which has been underway since 2003, will provide nationally consistent
estimates of environmental effects resulting from conservation
practices and systems applied. CEAP results will be used in conjunction
with performance data gathered through agency fieldlevel business
tools to help produce estimates of environmental effects accomplished
through agency programs, such as CSP. In 2006 a Blue Ribbon panel
evaluation of CEAP \2\ strongly endorsed the project's purpose but
concluded ``CEAP must change direction'' to achieve its purposes. In
response, CEAP has focused on priorities identified by the panel and
clarified that its purpose is to quantify the effects of conservation
practices applied on the landscape. Information regarding CEAP,
including reviews and current status, is available at http://
www.nrcs.usda.gov/technical/NRI/ceap/. Since 2004 and the initial
establishment of longterm performance measures by program, NRCS has
been estimating and reporting progress toward longterm program goals.
The NRI and assessment and the performance measurement and reporting
policies are set forth in agency guidance (GM290400, GM340401,
and GM340403) (http://directives.sc.egov.usda.gov/).
\1\ The exception to this is the CRP; since 1987 the NRI has reported acreage enrolled in CRP.
\2\ Soil and Water Conservation Society. 2006. Final Report from
the Blue Ribbon Panel Conducting an External Review of the US
Department of Agriculture Conservation Effects Assessment Project.
Ankeny, IA: Soil and Water Conservation Society. This review is
available at http://www.nrcs.usda.gov/technical/NRI/ceap/.
Demonstrating the longterm conservation benefits of conservation programs is an agency responsibility. Through CEAP, NRCS is in the process of evaluating how these longterm benefits can be achieved through the conservation practices and systems applied by participants under each of its programs. The CSP program requirements applicable to participants that relate to producing longterm conservation benefits are located in Sec. 1470.21 ``Contract requirements,'' Sec. 1470.22 ``Conservation stewardship plan,'' and Sec. 1470.23 ``Conservation activity operation and maintenance.'' These requirements and related program management procedures supporting program implementation are set forth in agency guidance (Conservation Programs Manual 440Part 512 and Conservation Programs Manual 440Part 508).
Coordinate these actions with the national conservation program authorized under the Soil and Water Resources Conservation Act (RCA). The 2008 Act reauthorized and expanded on a number of elements of the RCA related to evaluating program performance and conservation benefits. Specifically, the 2008 Act added a provision stating: ``Appraisal and inventory of resources, assessment and inventory of conservation needs, evaluation of the effects of conservation practices, and analyses of alternative approaches to existing conservation programs are basic to effective soil, water, and related natural resources conservation.''
The program, performance, and natural resource and effects data described previously will serve as a foundation for the next RCA, which will also identify and fill, to the extent possible, data and information gaps. Policy and procedures related to the RCA are set forth in agency guidance (GM290400 and GM130402) (http:// directives.sc.egov.usda.gov/).
The coordination of the previously described components with the RCA is an agency responsibility and is not reflected in these regulations. However, it is likely that results from the RCA process will result in modifications to the program and performance data collected, to the systems used to acquire data and information, and potentially to the program itself. Thus, as the Secretary proceeds to implement the RCA in accordance with the statute, the approaches and processes developed will improve existing program performance measurement and outcome reporting capability and provide the foundation for improved implementation of the program performance requirements of section 1244(g) of the Food Security Act of 1985.
Economic AnalysisExecutive Summary
Pursuant to Executive Order 12866, Regulatory Planning and Review, NRCS conducted a costeffectiveness analysis (CEA) of the CSP as formulated for the interim final rule.
This CEA describes how CSP financial assistance and technical
assistance are made available to farmers and ranchers who agree to
install and adopt additional conservation activities; and improve,
maintain, and manage conservation activities in place in accordance
with CSP's objectives. The CEA compares the impact of these activities
in generating environmental benefits with program costs. Many of these
improvements can produce beneficial impacts concerning onsite [[Page 31613]]
resource conditions (such as conserving soil) and significant offsite
environmental benefits (such as cleaner water, improved air quality, and enhanced wildlife habitat).
The environmental outcomes expected to be generated by enhancement activities are based on extrapolations of the environmental outcomes that have been studied and associated with many traditional NRCS conservation practices. While the outcomes from many traditional conservation practices have been assessed, the impacts generated from these enhancements are not as well studied. In conducting economic analyses where benefits are not well understood or difficult to measure, but activity costs are available, the traditional benefitcost analysis is generally replaced with a CEA, the approach used for both this assessment and the interim final rule.
In considering alternatives for implementing CSP, NRCS followed the
legislative intent to establish a clear and transparent method to
determine in an open and participatory process, potential participants'
current and future levels of conservation stewardship in order to gauge
their environmental impacts and compare them. Because CSP is voluntary,
the program is not expected to impose any obligation or burden upon
agricultural producers and nonindustrial private forestland (NIPF) owners who choose not to participate.\3\
\3\ An impact could be expected in cases where CSP funds
activities that lead to large increases of certain environmental
services and goods where those markets are beginning to get started.
Congress authorized the enrollment of 12,769,000 acres for each fiscal year (FY) for the period beginning October 1, 2008, through September 30, 2017. For FY 2009 through FY 2012, CSP has been authorized 51,076,000 acres (4 years multiplied by a 12,769,000 acre program cap per year).
Total program costs for CSP are shown in Table 1. Full
participation is assumed for each of the 4 years CSP is offered, and
the duration of each contract is 5 years. Total costs include only
costs to the government.\4\ Cumulative program costs for four program
ranking periods are estimated to be $2.990 billion in constant 2005
dollars, discounted at 7 percent. At a 3 percent discount rate, program costs increase to $3.520 billion in constant 2005 dollars.
\4\ Given the wide set of possible initial resource conditions
and conservation activities likely to be adopted, it is not possible
to ascertain whether (or to what extent) CSP payments offset
expected costs to producers in adopting new activities or past activities.
The information in Table 1 highlights the cumulative impacts of four ranking periods and 5year contracts. Each signup creates a commitment of $229.842 million for 5 years. Participants in the initial ranking period receive payments through FY 2014; participants in the last ranking period receive payments through FY 2017. The largest outlays of program funds occur in FY 2013 and FY 2014 and then begin to taper off as contracts from the first and later ranking periods end. Table 1Total Program Costs of CSP, FY 2010 to FY 2017 GDP price Yearly cost in Yearly cost deflator \2\ constant Discount Present value Discount Present value \1\ (million (chained, dollars \1\ factors for of costs3% factors for of costs7% $) 2005=100) (million $) 3% (million $) 7% (million $) FY10.................................... 229.842 108.5 211.836 0.9709 205.666 0.9346 197.978 FY11.................................... 459.684 110.1 417.515 0.9426 393.548 0.8734 364.674 FY12.................................... 689.526 111.3 619.520 0.9151 566.949 0.8163 505.713 FY13.................................... 919.368 113.1 812.881 0.8885 722.234 0.7629 620.143 FY14.................................... 919.368 115.6 795.301 0.8626 686.034 0.7130 567.039 FY15.................................... 689.526 118.1 583.849 0.8375 488.965 0.6663 389.043 FY16.................................... 459.684 120.7 380.848 0.8131 309.665 0.6227 237.173 FY17.................................... 229.842 123.4 186.258 0.7894 147.034 0.5820 108.404
Total............................... 4596.840 .............. 4008.008 .............. 3520.093 .............. 2990.166 \1\ Congress set a maximum acreage limit of 12,769,000 acres and a national average payment rate of $18 per acre. \2\ USDA Agricultural Projections to 2019. Office of the Chief Economist, World Agricultural Outlook Board, U.S. Department of Agriculture. Prepared by the Interagency Agricultural Projections Committee. Longterm Projections Report OCE20101, page 15. Methodology Employed in This Study
Many conservation practices have been extensively studied, but similar studies pertaining to enhancement activities have not been conducted. We do not have sufficiently detailed, sitespecific information on existing conservation practices and environmental outcomes. As a result, estimation of a true baseline of environmental conditions before and after CSP implementation is not possible.
The methodology employed in this final assessment is the same methodology applied in the interim final rule except that data from the initial CSP ranking period are substituted for the representative farm and environmental data. Although instructive in identifying possible outcomes of different formulations of CSP, actual enrollment and contract data are necessary to provide a fuller assessment of CSP outcomes. A relative comparison of results from the interim final rule and the final rule was also conducted to identify differences between predicted and actual outcomes, determine why differences were observed, and make recommendations, when necessary, to improve CSP's cost effectiveness. This comparison should not be used beyond its stated purpose because of different data sets in the two analyses. CSP and the Conservation Measurement Tool
CSP is a challenging program given its purpose, statutory mandates,
assessments of existing and future conservation activities and their
associated conservation indices, allocation of program funds and acres
across States, and price setting. The following are key elements about CSP and the conservation measurement tool (CMT).
(a) NRCS allocated acreage for enrollment across States according
to each State's proportion of the Nation's agricultural land base.
(b) NRCS State offices created ranking pools, selected three to five priority
[[Page 31614]]
resource concerns for every pool, and allocated acres and program dollars from the national office across the pools.
(c) A national team of NRCS cropland, pastureland, rangeland, and
forest land specialists developed sets of questions by land use
category to identify conservation activities already applied to the
land and the associated level of stewardship by assigning conservation
performance points. The team also identified additional enhancements
for increasing stewardship and assigned conservation performance points
to the additional enhancements. NRCS' Conservation Practice Physical
Effects methodology was used in both of these instances to assign
performance points. Conservation performance points earned by land use should be viewed as ``environmental indices.''
(d) NRCS developed a CMT to determine eligibility by verifying that
minimum stewardship thresholds were met, estimating conservation
performance from existing and additional activities, and ranking applications.
(e) NRCS field staff tested the questions and the CMT and made suggestions that improved CMT's use.
(f) During the initial ranking period, NRCS assisted producers in
completing their resource inventories in the CMT and determining
program eligibility. Eligible applicants identified additional
activitiesenhancements and traditional conservation practicesthey
were willing to adopt. Each applicant's resource inventory and
additional activities recorded in the CMT earned conservation performance points per acre by land use.
(g) Every application was ranked within a pool according to the sum
of four equally weighted ranking factors. The maximum ranking score is
1,000; the minimum zero. NRCS selected applications for enrollment
beginning with the highest ranked one and worked down the ranked list
until a pool's funding limit or acreage limit was reached. A fifth
ranking factor came into play as a ``tie breaker'' when two or more
applications were ranked equally. When this situation occurred, the
application that minimized the cost to government was selected.\5\ The four equally weighted ranking factors are below:
\5\ ``* * * the Secretary shall rank applications based on * * *
(E) the extent to which the actual and anticipated environmental
benefits from the contract are provided at the least cost relative to other similarly beneficial contract offers.''
(1) Ranking factor one measures the existing level of conservation
stewardship for priority resource concerns at the time of enrollment.
(2) Ranking factor two measures the degree that new conservation activities improve priority resource concern conditions.
(3) Ranking factor three measures the number of priority resource
concerns the applicant agrees to meet during the contract period.
(4) Ranking factor four measures the degree that new conservation activities improve other resource concern conditions.
(h) CSP payment per land use equals conservation performance points
per acre multiplied by acres multiplied by the land use payment rate.
Total payment per contract equals the sum of the individual land use payments.\6\
\6\ For CSP ranking period one, payment rates are $0.0605 for
every cropland conservation performance point, $0.0329 for pasture, $0.0120 for rangeland, and $0.0164 for NIPF.
(i) The four policy options used in the interim final rule are also
used in the final rule to identify tradeoffs among the policy options,
especially changes in program acres, conservation performance points,
program costs, and implications with respect to CSP's acreage and funding constraints.
Detailed descriptions of CSP, CMT, ranking period results, and CEA analysis can be found in the main body of the report and the appendices.
Analysis
Results of this analysis show that CSP participation was high
across the nation. As of December 1, 2009, NRCS had classified 15,015
applications as eligible. These applications involved slightly more
than 20.8 million acres, close to double CSP's maximum allowable of 12.179 million acres.\7\
\7\ To avoid enrolling too many acres or spending more than the
$230 million available for this first ranking period, NRCS initially
allocated 95 percent of the 12.769 million acres. As enrollment progressed, NRCS allocated the remaining acres.
Some concerns were raised regarding participation in ranking pools. No applications were received in 250 of the 693 pools created for CSP. NRCS found that the majority of these pools were established specifically for conservation access by beginning farmers or ranchers and socially disadvantaged farmers or ranchers. All eligible applications were preapproved in 303 ranking pools because allotted acreage and funding allocations were not fully committed. The remaining 140 pools accounted for slightly more than 86 percent of eligible acres, making them highly competitive.
More than 80 percent of the eligible applicants across all land uses were already meeting and frequently exceeding minimum stewardship levels on five of the eight resource concerns. Applicants in the initial CSP ranking period appear to be practicing stewardship at a fairly high level. As a result, one would expect to see conservation performance points earned for existing activities to be higher than performance points earned for additional activities. Summary data from preapproved applications in the initial ranking period confirm this expectation. Existing conservation performance points amounted to 61 percent of total points awarded nationally. This 6139 percent split between existing and additional conservation performance points carried directly over into payments, with 63 percent of projected $142.6 million in financial assistance tied to existing activities.
The policy options described and analyzed using representative farm and environmental data in the interim final rule indicated that CSP outcomes could be finetuned at the national level by changing the relative importance of the ranking factors. Based on that analysis, policy option 1 (four ranking factors were weighted equally) was selected and used for the initial CSP ranking period. Because three of the four ranking factors are linked directly to additional activities, an equal weighting scenario places considerable importance on additional activitiesenhancements and traditional conservation practicesproposed to be applied over a 5year period. The expectation was that the highest ranked applications would include substantially more additional conservation activities than lower ranked applications. One of the other policy options might be used to influence the mix between existing and additional activities after reviewing actual CSP enrollment.
The five policy options and their reported acreage and program
costs by land use are summarized in Table 2. Policy option 1 represents
the actual CSP ranking period where the ranking factors are equally
weighted. Analyses conducted for policy option 2 (ranking factor 1
receives 5 times the weight62.5 percentof the other ranking
factors), policy option 3 (ranking factor 2 receives 5 times the
weight62.5 percentof the other ranking factors), policy option 4
(ranking factor 3 receives 5 times the weight62.5 percentof the
other ranking factors), and policy option 5 (ranking factor 4 receives
5 times the weight62.5 percentof the other ranking factors) did not
appreciably change the percentage splits between existing and
additional performance points and funding. Though acres and costs shifted among the different land uses, the
[[Page 31615]]
impact on total program costs and costs per acre suggests that policy
options 2 through 5 did not substantially change the current
distributions of funds and acres under policy option 1, which was used for the initial CSP ranking period.
Table 2Summary of Program Acreage and Costs by Land Use and Policy Options for CSP SignUp One
Acres funded in program \a\ Total program cost \b\ Cost per
Policy Option acre Range Range
Crop land Pasture land NIPF Total\2\ Crop land Pasture land NIPF Total
(millions of acres)
($ millions)
No CSP.......................... N/A 0 0 0 0 0 0 0 0 0 0
........ ......... ......... ......... ......... ......... ......... 14.30 38.90 9.96 180.48
PO1............................ $14.82 4.833 0.797 5.529 1.019 12.179 117.308 6 9 3 6
........ ......... ......... ......... ......... ......... ......... 14.33 39.16 9.68 176.16
PO2............................ 14.79 4.570 0.792 5.568 0.985 11.914 112.988 2 2 7 9
........ ......... ......... ......... ......... ......... ......... 14.36 37.08 9.36 171.47
PO3............................ 14.66 4.752 0.786 5.204 0.951 11.694 110.659 4 3 7 2
........ ......... ......... ......... ......... ......... ......... 14.36 38.41 9.86 177.85
PO4............................ 14.88 4.726 0.773 5.452 1.004 11.955 115.581 8 5 6 0
........ ......... ......... ......... ......... ......... ......... 13.83 36.13 9.32 179.46
PO5............................ 15.27 4.949 0.757 5.097 0.950 11.753 120.171 6 7 1 5
\a\ For this analysis, the CSP acreage cap is 12.179 million acres including the 10 percent allocated to NIPF. This was the initial allocation
distributed to States shortly after closure of the initial CSP ranking period. \b\ Includes financial and technical assistance.
NRCS noticed some large operations fell just below the cutoff line in many of the pools for policy option 1, the actual ranking period. These operations moved up the ranked list and effectively prevented the distribution of the full amount of acres under the other policy options. Their impact can be seen by examining the total acres in Table 2.
In examining the summaries of conservation performance points and
costs per point, the agency reached a similar conclusion regarding the
effectiveness of policy options 2 through 5 in changing the emphasis of
CSP between existing and additional activities (see Table 3). The
relatively insignificant changes in total conservation performance
points and dollars per point suggest that significant changes in the
ranking process yield few tangible results in practice. A closer
examination of the applications show considerable shifting of the
applications in terms of rankings, but few of the applications that
were ranked low during the actual ranking period moved up the list to the level of approval.
Table 3Summary of Conservation Performance Points and Cost per Point for CSP Policy Options
Dollars per point
Existing Additional
activities activities Total points Additional
activities All activities
(millions of conservation performance points)
($)
No CSP \a\.................................................... Indeterminate N/A N/A N/A N/A
PO1.......................................................... 3,960 2,488 6,448 0.0573 0.0221
PO2.......................................................... 3,964 2,368 6,332 0.0590 0.0220
PO3.......................................................... 3,779 2,502 6,281 0.0564 0.0225
PO4.......................................................... 3,920 2,398 6,319 0.0587 0.0223
PO5.......................................................... 3,790 2,481 6,271 0.0576 0.0228
\a\ Assumes CSP is not available to landowners. Data are not available to assess this situation. \b\ Indeterminate.
Other possible reasons were identified to explain why the ranking process produced such minor shifts in conservation performance points and funding between existing and additional activities. Applicants, for example, who were addressing a State's priority resource concerns received more ranking points than applicants who chose to address fewer priority resource concerns. As part of the policy analysis, it became apparent that ranking factor 3 moved closely with ranking factor 1. A recommendation in the conclusions and recommendations section breaks this relationship with ranking factor 1, making it strictly a factor that awards ranking points based on proposed new activities that assist producers in meeting minimum stewardship levels of priority resource concerns.
Another possible reason is the CMT and how activities and conservation performance points are assigned. An additional reason is the ranking process itself. Modifications to account for these two reasons are detailed in the recommendations.
The results reported above and other secondary results from the analysis of eligible applications and preapproved contracts in CSP's initial ranking period substantiate many of the initial CEA findings reported in the interim final rule. One primary finding was that the policy constraints on the program posed serious challenges for the model developers. It is obvious that these constraints will pose similar challenges in implementing this program. In particular, achieving the national annual acreage enrollment goal at the designated average costs per acre mandated in legislation will be a challenge given the heterogeneity of producers' initial resource conditions and demand for enhancements. This cautionary observation held true in the initial ranking period and appears to be a major concern in subsequent ranking periods.
Second, the annual contract limit of $40,000 per contract imposed by the interim final rule influences program
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outcomes. CSP gains program acreage when large operations, 13.8 percent
of the preapproved contracts in the first ranking period, hit the
maximum annual payment limit and remain enrolled. Costs per acre for
the program decrease because program funding is spread over more acres.
As predicted though, CSP's acre constraint of 12.769 million acres
becomes the controlling factor because of the acres linked to the large
operations. Though NRCS received an apportionment of $229,842,000, the
financial assistance portion cannot be fully spent because the acreage
constraint was met for the initial CSP ranking period. Furthermore,
NRCS offices incur technical assistance costs associated with these
additional acres, regardless if the acres are capped for payment.
Third, the policy options that were part of the CEA in the interim final rule proved useful in the final assessment. The different policy scenarios reinforced the fact that CSP outcomes depend to a large extent on the applications submitted for enrollment. The policy scenarios also contributed to a better understanding of how the ranking factors were defined and implemented.
Finally, program design and adaptive program management are critical in satisfying the mandated constraints of this program. The model results of the CEA used in the interim final rule showed that caution must be used in setting land use payment rates. This is due to the changing land use compositions and conservation performance outcomes that resulted under each alternative policy option. Such changes could be expected in subsequent ranking periods and alter the acreage and conservation performance points produced. Such changes would need to be included in the calculation of appropriate land use payment rates that conform to the CSP statute, particularly the $18 per acre national program cost constraint.
Conclusions and Recommendations
As part of the 2008 Act, Congress created the CSP and instructed the Secretary of Agriculture to develop a program that compensates a producer for ``* * * installing and adopting additional conservation activities; and improving, maintaining, and managing conservation activities in place at the operation of the producer at the time the contract offer is accepted by the Secretary.'' Producers must also meet minimum stewardship levels before they become eligible for CSP. Acreage, budget, a national average price of $18 per acre, and a maximum annual payment of $40,000 per contract established in the interim final rule also complicate program implementation.
The CSP as currently implemented received more than enough applications to make it a competitive program. Of the 15,015 eligible applications, 10,743 were preapproved for enrollment, and those selected were the highest ranked eligible applications. The preapproved applications resulted in 6139 percent split in conservation performance points and 6337 percent split in program payments between existing and additional activities, respectively. The acreage constraint limited the ability of NRCS to distribute all the funds provided by Congress.
Though little guidance is given on a suitable split of financial assistance funds between existing and additional conservation activities, preliminary analysis indicates that the initial CSP ranking period attracted practicing conservationists. Almost every applicant met the stewardship threshold requirement at the time of application. More than 80 percent of the applicants were meeting five resource concerns at time of application. The $40 thousand cap per contract and the requirement that all acres of an operation must be enrolled impacted CSP. The acreage constraint became the limiting factor because 1,487 (13.8 percent) preapproved applications exceeded the cap, but their acres were counted, making it impossible for NRCS to distribute all the funds.
A total of five policy options were developed as candidates for improving CSP's overall cost effectiveness at the national level. These policy options are directly tied to CSP's ranking process. Under policy option 1, the four ranking factors are equally weighted. In the remaining options, each ranking factor is separately weighted five times more important than the other factors. Based on the interim analysis, the ranking process recommended and implemented for the first CSP signup was policy option 1. This translated into an effective weighting scheme of 25 percent for existing activities and 75 percent for additional activities.
For the most part, these policy options exhibited their intended impacts. With each change in the weights assigned to the ranking factors, ranking scores changed, and applications moved up and down in ranking based on their mix of existing and additional conservation activities and whether priority resource concerns were being targeted. With five times the weight assigned to ranking factor 1 (policy option 2), for example, NRCS observed applications with many existing practices earning more ranking points than applications with fewer existing practices and applications with similar additional activities. When weights were assigned to ranking factors that captured additional activities, NRCS observed the opposite. Applications with many additional activities ranked higher than applications with a similar complement of existing activities and applications with fewer additional activities. Overall, policy options 2 through 5 did not yield substantially different changes in conservation performance points and financial assistance between existing and additional activities. Analysis of the data suggests that this initial CSP ranking period attracted practicing conservationists. NRCS expects future ranking periods to be more representative of the larger agricultural sector as others learn about CSP and the remaining population of practicing conservationists yet to enroll declines with each ranking period.
There is insufficient evidence of improved cost effectiveness to replace policy option 1 with any of the other options. Prior to CSP ranking period two, NRCS will review key program components eligibility requirements, minimum stewardship levels, conservation activities and conservation performance points, CMT, and ranking factor specificationsand make any necessary modifications. In addition, NRCS will investigate other ranking factor processes, additional ranking criteria, and separate prices for existing and additional conservation performance points. As data becomes available and is analyzed from each new ranking period, NRCS will make necessary changes to improve CSP's cost effectiveness.
Discussion of Program
The 2008 Act amended the Food Security Act of 1985 to establish the CSP and authorize the program in fiscal years 2009 through 2012. The CSP statute provides that the Secretary will carry out a stewardship program to encourage producers to address resource concerns in a comprehensive manner by (1) undertaking additional conservation activities, and (2) by improving, maintaining, and managing existing conservation activities. On July 29, 2009, NRCS published an interim final rule for CSP with a 60day public comment period. On September 21, 2009, the public comment period was extended 30 days.
NRCS explained in the preamble of the interim final rule, that it
will provide financial and technical assistance to eligible producers to
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conserve and enhance soil, water, air, and related natural resources on
their land. Eligible lands include cropland, grassland, prairie land,
improved pastureland, rangeland, NIPF, agricultural land under the
jurisdiction of an Indian tribe, and other private agricultural land
(including cropped woodland, marshes, and agricultural land used for
the production of livestock) on which resource concerns related to agricultural production could be addressed.
The NRCS State Conservationist, in consultation with the State Technical Committee and local working groups, will focus program impacts on natural resources that are of specific concern for a State, or the specific geographic areas within a State. Applications will be evaluated relative to other applications addressing similar priority resource concerns to facilitate a competitive ranking process among applicants who face similar resource challenges. The program is national in scope, and participation is voluntary.
CSP provides participants with two possible types of payments: (1) Annual payments will be offered through splitrate payments; one payment for installing and adopting additional activities, and one for improving, maintaining, and managing existing activities. This payment structure is different from the annual payments offered for contracts selected in the 2009 enrollment period. Contracts selected in the 2009 enrollment period will receive an annual payment that combines the conservation performance from additional and existing conservation activities. Annual payments may also include compensation for onfarm research and demonstration activities or pilot testing, and (2) Supplemental payment for the adoption of resourceconserving crop rotations on cropland.
The 2008 Act directed the development of the CMT to estimate the level of environmental benefit to be achieved by a producer in implementing conservation activities. NRCS successfully implemented the CMT during its first signup. The CMT effectively evaluated the stewardship threshold requirements, estimated conservation performance, generated a ranking score, and calculated conservation performance payment points. Preliminary data analysis showed the CMT fairly evaluated conservation performance on different sizes and types of operations, across different land uses, for all regions of the country. Although the tool performed well, NRCS recognized that improvements were necessary to improve clarity of the questions being asked of clients. Therefore, NRCS assembled a team of technical experts to analyze the questions in the CMT that could be misunderstood, identify those needing adjustment, and provide recommendations to the Chief.
NRCS designed the program to recognize excellent stewards and
deliver valuable new conservation on every CSP contract. The agency
developed multiple program features to enable it to realize this objective, including:
(1) Bundling enhancements to encourage participants to address
additional resource concerns in a more comprehensive manner. NRCS
updated its enhancement list and adopted the concept of bundling for
the second ranking period. Certain enhancements will be offered as
``bundles.'' The bundling concept enables participants and the nation
to realize conservation benefits from the synergy that results when
activities are implemented as a system. Participants who elect to
bundle enhancements receive a positive adjustment in their ranking score and payments.
(2) Calculating payments based on a process that considers
conservation performance points rather than just acres. Each
conservation activity has a performance value. Basing payments on
conservation performance points rather than a rate per acre enables
participants to influence their payment rates according to the type and
number of conservation activities they are willing to adopt.
(3) Placing a higher value on payments for additional activities
versus existing activities through splitrate payments. For contracts
selected for enrollment during the first ranking period, NRCS provided
participants with an annual payment. Although the single annual payment
was calculated giving consideration to both new and existing
activities, participants could not readily distinguish the value of
each since the participant received one payment. For the second and
future application ranking periods, NRCS intends to calculate payments
for additional conservation activities at a higher payment rate than
existing activities with the goal of providing a majority of payments
to compensate producers for implementing additional conservation. In
the initial ranking period, 63 percent of the payments were attributed
to existing conservation activities. NRCS believes this higher payment
for additional conservation performance will encourage producers to
apply additional activities and serve to maximize net additional
environmental benefits as much as possible beyond the current 63:37 ratio.
(4) Requiring the adoption of additional conservation activities to
earn annual payments. To earn annual payments for an eligible land use,
a participant must schedule, install, and adopt at least one additional
conservation activity on that landuse type. Eligible landuse types
that fail to have at least one additional conservation activity
scheduled, installed, and adopted will not receive annual payments.
(5) Implementing a State allocation process that considers the
extent and magnitude of conservation needs associated with agriculture
production. The State allocation process will consider natural resource
data from sources like the NRI related to the nation's major resources
concerns, including water quality and quantity, soil quality, air quality, and wildlife habitat.
(6) Developing contract renewal criteria that require new
conservation activities. In order to renew a contract after the initial
contract period, participants will need to expand the degree, scope,
and comprehensiveness of conservation activities by meeting an expanded
stewardship threshold requirement and agreeing to adopt additional activities during the renewal period.
In establishing the measures and methodologies NRCS will use to monitor program performance, the agency believes the CMT will assist in measuring outcomes. The conservation performance the CMT estimates is measured in terms of relative physical effects; they are not true environmental benefits. However, the CMT performance estimates are a step forward from output measures, like acres of conservation practices, used by former programs. NRCS acknowledges challenges, but intends to pursue the use of CEAP results with CMT performance data to help produce meaningful estimates of environmental effects accomplished through CSP.
NRCS received numerous comments on CSP as it relates to organic farming, including that the regulations and overall design of the program should include specifically organic conservation activities, as well as ensuring that all conservation activities rewarded under the program include appropriate variations relevant to organic farms where the standard conservation practice may be inappropriate for organic systems; organic crop and livestock systems should be recognized for their environmental benefits.
Since organic producers have adopted a number of conservation measures that
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have significant environmental benefits, CSP provides opportunities for
their participation. The NRCS document entitled ``The Conservation
Stewardship Program's Contribution to Organic Transitioning''
highlights how CSP can be used by organic producers. The questions in
the CMT are designed to assess conservation outcomes on the land. As
such, the questions do not specifically distinguish between organic and
nonorganic producers. However, in most instances organic producers
should score very well in the CMT by the use of cover crops,
perennials, diverse rotations, and limited use of pesticides. In
addition, CSP offers a number of enhancements targeted specifically at organic producers.
NRCS takes seriously its responsibilities related to providing conservation opportunities to organic producers. The agency is working to ensure its field office staffs have adequate training to work with organic farmers. Individual States conducted numerous training sessions on conservation planning with organic producers. A national teleconference on organic certification has been conducted, and plans are in place to work with several private organic groups to provide training to NRCS State specialists on organic farming systems. Summary of Initial Ranking Period
NRCS began accepting program applications for the initial ranking period on August 10, 2009. The cutoff for the initial ranking period was September 30, 2009.
Each application was evaluated for basic eligibility criteria: applicant eligibility, land eligibility, and the stewardship threshold requirement. To meet the stewardship threshold requirement, an applicant must meet or exceed the threshold level for at least one resource concern at the time of the application, and at least one priority resource concern by the end of the contract period.
NRCS assisted applicants with completing a resource inventory of their operation using the CMT. The CMT estimates conservation performance to determine if the application meets the minimum stewardship threshold requirement. Conservation performance points estimated by the CMT are also used to determine application ranking scores and contract payment levels.
The conservation performance ranking score is used to determine the
priority of funding for an applicant. Applicants will be funded
starting with the highest score and working down the list until acres
are exhausted. The conservation performance ranking score is based on five factors:
(1) The level of conservation treatment on priority resource concerns at the time of application.
(2) The degree to which treatment on priority resource concerns increases conservation performance.
(3) The number of priority resource concerns to be treated to meet or exceed thresholds by the end of the contract.
(4) The extent to which other resource concerns will be addressed
to meet or exceed stewardship thresholds by the end of the contract.
(5) A tiebreaker factor is used in the event that application
ranking scores are similar. The application that represents the least cost to the program will be given higher priority.
To reach CSP's authorized annual acreage enrollment limit of 12,769,000 acres, NRCS allocated acreage to States based primarily on each State's proportion of eligible land. Within States, NRCS pre approved applications for funding based on ranking scores and funding pool acreage allocations. As of December 1, 2010, over 10,700 applications were preapproved for program participation.
Preliminary analysis of the initial ranking period provided NRCS with some key findings.
(a) Producer interest in CSP was high. During the initial ranking
period, NRCS received over 21,000 applications on an estimated 33
million acres from across the Nation including the Caribbean and
Pacific Island areas. In general, applicants were diverse in terms of
size of operation, land use type, and geographical location. Rangeland
was the land use most offered for program consideration (51 percent of
acres), followed by cropland (37 percent), NIPF (7 percent), and pastureland (5 percent).
(b) Water quality (89 percent of pools), plants (85 percent pools),
wildlife (77 percent pools), soil quality (nearly 70 percent of pools)
were the top priority resource concerns identified in the funding pools by the States.
(c) Eligible applicants share a common characteristicthey are
excellent stewards of the land. In fact, 80 percent of applicants met
five resource concerns at the time of application. Conservation
performance payment points from existing activities equaled 63 percent
of the total points generated. This dominance of practicing land
stewards in the initial ranking period limited the agency's ability to
change the relative weights on the factors in the ranking process and
substantially alter the distribution of conservation performance
payment points between existing and additional activities. Future sign
ups will likely draw applicants from the larger agricultural community
where the level of stewardship may be lower, thus giving additional activities a larger role in the ranking of applications.
Discussion of Comments and Regulatory Changes
NRCS solicited comments on the CSP interim final rule from July 29, 2009, through October 28, 2009. The original comment period ended on September 28, 2009, but was extended through October 28, 2009, to enable the public to submit comments throughout the program's first enrollment period. NRCS received 208 letters representing 208 individual signatures. The total number of letters received includes five identical duplicate letters and eight letters from eight individuals submitting more than one unique letter. A total of 1,534 comments were assessed during the content analysis process.
In addition to requesting public comment in general on the rule and the envir
FOR FURTHER INFORMATION CONTACT
Dwayne Howard, Branch Chief, Financial Assistance Programs Division, Department of Agriculture, Natural Resources Conservation Service, 1400 Independence Avenue, SW., Room 5237 South Building, Washington, DC 20250; Telephone: (202) 7201845; Fax: (202) 7204265; or email CSP2008@wdc.usda.gov.