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Final Rule Released for Conservation Stewardship Program

March 10, 2016


Farm in the Saginaw Bay Watershed. Photo credit: USDA

Farm in the Saginaw Bay Watershed. Photo credit: USDA

USDA today released the final rule for the Conservation Stewardship Program (CSP), which makes changes to CSP as required by the 2014 Farm Bill. The release of this final rule follows the publication of the Interim Final Rule (IFR) in November 2014.

CSP is a comprehensive working lands conservation program designed to help farmers and ranchers protect and improve natural resources and the environment. It provides assistance for farmers and ranchers to manage and adopt advanced conservation systems on agricultural lands through a commitment to continual improvement and exceeding stewardship thresholds for priority resource concerns.

Although the CSP IFR became effective immediately in 2014, it was subject to a public comment period. Over 200 comments were made during this period on the agency’s interpretation of their new authority under the 2014 Farm Bill, among other programmatic issues. Nearly half of the comments submitted came from farmers who have participated or are interested in participating in CSP.

This final rule comes just three weeks before the March 31 application deadline for producers to submit their initial applications for the 2016 CSP enrollment period. This is also the deadline for existing CSP participants to to renew contracts that are set to expire by the end of the year. This timeframe allows only a short window for farmers and ranchers to consider the changes made to the program through this rulemaking process.

The National Sustainable Agriculture Coalition (NSAC) engaged extensively in CSP’s original development, initial authorization, and two subsequent reauthorizations, and has followed its implementation closely ever since.

Based on internal analysis and feedback from our member organizations and their farmer networks, NSAC submit detailed comments on the IFR in January 2015.

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Wins

The final rule makes a few important changes to the interim rule that was used for the 2015 sign-up and ranking period.

Minimum Contract Payment

The rule revises the minimum contract payment, which was previously $1,000 and only available to historically underserved producers. For the 2016 sign-up period, a new minimum of $1,500 is now available to all successful applicants. This is a big win for small acreage farmers, including specialty crop growers, ensuring that the program better rewards superior environmental performance for all operations, regardless of their size.

NSAC has long encouraged the agency to adopt this proposal in order to level the playing field for smaller operations. Unfortunately, the new minimum is not actually codified as part of the updated and final CSP regulation. In its place, USDA inserted revised language in the rule to set the minimum at a “rate determined equitable by the Chief based upon the effort required by a participant to comply with the terms of the contract.”

While we applaud the agency for setting the minimum at $1,500 for the 2016 sign-up, we are disappointed that this rate will not be codified as the new minimum. As the agency itself notes in its economic analysis, this effect of this change upon program cost is negligible. We strongly urge NRCS to continue to apply this common sense minimum in future sign-ups as well.

Beginning Farmers and Ranchers

While it is disappointing that the rule itself proposes no new innovations to improve the program for beginning farmers, we are pleased at NRCS’s supplementary response to commenters’ strong demand for increased access to CSP acres for beginning farmers. NRCS has declared it will establish a policy goal to expand enrollment of beginning and socially disadvantaged farmers and ranchers in all ranking pools, and that it will also allocate additional acres to the two set-aside ranking pools as needed to address demand amongst these producers. The statute and the rule sets aside a minimum of five percent of acres to assist beginning farmers and ranchers and another five percent to socially disadvantaged farmers and ranchers.

Beginning with the 2016 enrollment period, NRCS should act on their new policy goal by increasing the set-aside pools to reflect the high need for increased access. Currently, beginning farmers operate over 17 percent of all farms in the United States, which means CSP still has a lot of growing to do before the program accurately reflects this demand.

NRCS has also indicated in the preamble to the final rule that they will explore the possibility of adding a separate ranking pool for small operations, so that they do not have to compete in the same pool as larger farms. We plan to provide input to the agency on this idea.

Losses

While the final rule made some important strides to increase access for smaller acreage and beginning farmers, the revisions ultimately failed to address major shortcomings in the IFR around how participants are ranked, scored, and rewarded for their stewardship efforts.

Ranking and Payments

We are disappointed that the final rule still fails to ensure that CSP can appropriately reward the best stewards of the land, regardless of when a conservation activity was first adopted. As we have previously advocated, differences in rankings and payments should reflect nothing other than actual or expected differences in environmental benefits, financial costs, and forgone income to the farmer.

Despite a large outcry from interim rule commenters who called for the equalizing of how existing activities are ranked and rewarded, and despite the fact that the statute stresses both additional and existing factors equally, the final rule fails to address the statutory purpose of the program. With regard to payments, the program pays much less per environmental benefit for active management of ongoing conservation as for the adoption of new practices – less than 10 percent for cropland, pasture, range, and forest, and only 13 percent for pastured cropland.

NSAC agrees there should be a reduction in the payment to reflect actual differences in cost for ongoing management of conservation compared to new adoption. However, these reductions should account for at most a third of the total payment factors, given that, by statute, payments are also intended to reflect environmental benefits and foregone income.

The final rule also perpetuates the agency’s wild interpretation of the statute’s ranking system, which tilts the program strongly in the direction of farmers with a lower existing commitment to advanced conservation systems.

The agency has also failed to address several of the specific comments made by NSAC on the interim rule, not even bothering to provide a rationale for their rejection of our specific recommendations.

In our view, the agency’s final rule and program implementation decisions are in direct violation of the statute, which is very clear about the application ranking system to participate in the program and the payment formula for participants selected.

Stewardship Thresholds

We are disappointed that USDA did not revise the definition of “stewardship threshold” — the level of conservation that participants must meet or exceed in addressing targeted resource concerns. NSAC urged USDA to clarify that stewardship thresholds should be set at the sustainable use (or non-degradation) levels to ensure the program recognizes the best stewards of the land. NRCS received a large number of comments requesting that thresholds be set at the sustainable use level, and while the agency says it will continue to evaluate these levels after each sign up, no changes were made to the rule as a result, and to date no changes have been made in the thresholds themselves.

Contract Limitations for Joint Operations

NRCS received over 100 comments (nearly half of all comments submitted) that recommended that NRCS eliminate the higher contract limit that is currently available to joint operations. Joint operations include general partnerships, joint ventures, or other similar business entities often used to evade payment limitations.

CSP contracts last for five years, and the regular contract limit over that period of time is $200,000. NRCS previously established a regulatory contract limit of $400,000 for joint operations, which unfortunately, but predictably, led to mega-farm applicants restructuring their operations to qualify for the higher contract payment level. The IFR, in turn, prohibited business restructuring during the life of a CSP contract if the restructuring would result in qualifying for the higher $400,000 cap. However, the IFR did not prevent general partnerships from qualifying for the double payments from the outset of their participation in the program.

We are disappointed that NRCS is maintaining the $400,000 contract limit for joint operations, but are pleased that the final rule explains that the agency is considering requesting additional public comment on this topic through a separate Federal Register notice. We strongly urge NRCS to move forward with this additional rule making without delay.

Mid-Contract Flexibility

The final rule updates and clarifies provisions around voluntary contract modifications and transfers of land, but unfortunately takes a huge step in the wrong direction. Under the final rule, a farmer who loses a lease will have his or her CSP contract terminated and will have to repay assistance received to date if the following lessee is either ineligible for CSP, or does not want to inherit that portion of the original farmer’s CSP contract.

It is frankly difficult to imagine a more farmer unfriendly provision than this one. Rather than simply subtracting the acreage in question from the farmer’s overall CSP contract, as NSAC has repeatedly proposed, NRCS has decided to stick it to the farmer – even though, through not fault of the farmer’s, their landlord decides to go in a different direction. We are dumbfounded.

The sole bright spot is the agency’s indication that it is considering increased flexibility for farmers renewing their CSP contracts and is “exploring ways to facilitate the substitution of conservation activities between the initial contract and the renewal contract where appropriate”.

Previewing the 2017 CSP Overhaul

As we have previously reported, CSP is scheduled to undergo a major overhaul for the 2017 sign up period. While these changes are happening outside of the rulemaking period, many of the revisions in the final rule offer a preview of what is to come.

Replacement for the Conservation Measurement Tool

The major change driving the overhaul is the elimination of the Conservation Measurement Tool (CMT), which from 2009-2016 was the computer-based tool used to determine ranking and payments for CSP. It scored activities according to their projected environmental benefits, and calculated payments based on those expected outcomes. The 2014 Farm Bill removed the requirement for measurement tools to estimate environmental benefits, but the CMT was still in use for the 2015 and 2016 sign up periods. The CMT will be eliminated for 2017 and beyond. As a result, NRCS notes in the final rule that no changes are need to CSP regulations in response to any comments submitted on improving the transparency of the CMT.

From what we know of the overhaul plan to date, in place of the CMT there will be customized “screening sheets” that include the stewardship thresholds, priority resource concerns, existing conservation activities, and conservation enhancements that previously were incorporated into the CMT. We continue to urge NRCS to ensure that this new screening and ranking process upholds CSP’s performance and outcome-based identity, and also that it does so in a transparent and user-friendly manner.

Conservation Adoption Timing Revised

NSAC has been told by NRCS that as part of the overhaul, CSP will be moving to a ranking tool and payment system that is similar to that used in the Environmental Quality Incentives Program (EQIP), a program which provides one-time assistance through a cost-share for specific basic conservation practices. While we recognize the value in ensuring that NRCS programs are easily accessible for producers and field staff, we cannot emphasize enough that this program “makeover” should not eliminate CSP’s unique performance-based identity in the process. Foreshadowing the closer linkage between CSP and EQIP, in the final rule NRCS is adjusting the time requirements for when a producer must adopt additional conservation, as well as the timing for the adoption of resource-conserving crop rotations to be consistent with EQIP.

Options for Organic Producers

Another major shift in CSP program structure will be the requirement that all CSP enhancements be clearly linked to an existing NRCS conservation practice standard. NSAC supports the logic behind this update, which is that CSP participants should be going above and beyond the basic practices. However, we are concerned to hear that this change could possibly result in the elimination of several key enhancements that are particularly targeted to organic and transitioning to organic producers, as well as other enhancements that are important to sustainable agriculture more broadly. We will continue to urge NRCS to include these key enhancements in the revised CSP.

We are pleased that the preamble to the final rule includes mention of the possible introduction of organic “bundles” –suites of enhancements that provide greater environmental benefits when implemented in conjunction with one another. Depending on the details, this could be a good step in the right direction.

REMINDER – Three More Weeks to Sign up This Year

The final rule comes just three weeks before the March 31 application deadline for producers to submit their initial applications for the 2016 enrollment period and to renew contracts that are set to expire by the end of the year. The changes reflected in the final rule offer important opportunities for beginning and smaller acreage farmers.

In order to support producers going through the application process, the National Sustainable Agriculture Coalition has released its CSP Information Alert, with step-by-step sign-up and enrollment details, including a complete list of all conservation activities that enrollees will have to choose from as they consider their CSP options.

In addition to the Information Alert, NSAC has also published a more detailed Farmers’ Guide to the Conservation Stewardship Program, which includes enrollment guidance, key definitions, explanations of the ranking and payment system, and helpful hints for accessing the program.

The CSP Information Alert and The Farmers’ Guide to the Conservation Stewardship Program are available for free download on the NSAC website at: http://sustainableagriculture.net/publications.

Printed copies of the Farmers’ Guide can also be purchased. To inquire about ordering printed copies, email NSAC at intern@sustainableagriculture.net.


Categories: Conservation, Energy & Environment, General Interest, Grants and Programs


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