Senate Bill Establishes Conservation Security Program

November 28, 2001

The farm bill approved by the Senate Agriculture Committee establishes a conservation incentive program that provides payments to producers who adopt or maintain conservation practices on lands in production. The practices are aimed at improving and protecting natural resources including soil, water, air and wildlife habitat. Additional goals include practices that lead to sound management of invasive species, enhancement of carbon sequestration, and wetland enhancement or restoration.

It's a program that would be open to all agricultural producers, including those of livestock owners, speciality crops and program crops, for all private agricultural lands. Producers are encouraged by the legislation to adopt comprehensive conservation plans but retain the flexibility to choose which practices to adopt or maintain. In addition, local and state groups would provide guidance on implementation of the program, including establishing local conservation priorities. Producers would have maximum flexibility to adjust or terminate contracts without penalty, if obligations are met.

Producers would work with USDA's Natural Resources Conservation Service or eligible third party providers to create and implement conservation security plans that outline the practices, including the schedule of implementation, the producer agrees to maintain or implement.

The program establishes three tiers of participation in the program. Tier I covers the basic level of practices, including nutrient, pest, and air quality management, water conservation and wildlife habitat management that may apply to all or part of an operation. Tier II includes practices focusing on systems-based approaches to land management, including partial field practices, wetlands, grass and prairie restoration and protection. Tier II practices must cumulatively address at least one local resource of concern across the entire operation. To qualify for Tier III a producer must adopt practices that address all resources of concern on the entire operation. Tier I contracts last five years, and Tier II and III contracts last from 5-10 years, at the option of the producer.

Payment levels may reach $20,000 for Tier I, $35,000 for Tier II, and $50,000 for Tier III. Payments are based on a combination of factors, including a percentage of average county rental rate or appropriate rate to ensure regional equity (6%, 11% or 20% for Tier I, II, and III, respectively), bonus payments for increased environmental benefits and the cost of practices.

The producer receives 100% of the costs of adopting or maintaining management practices, 100% of the costs of maintaining land-based structural practices and 75% of the cost of adopting new land-based structural practices. Payments are not provided for the cost of purchasing equipment or for waste storage or treatment facilities. For producers who must meet conservation requirements under existing commodity programs, payments on these lands cover only those practices that exceed the minimal requirements for the commodity programs.

Payments are increased for beginning farmers and ranchers, for participation in research or demonstration projects or pilot programs, and for cumulative participation on a watershed basis. An advance payment of the greater of $1,000, $2,000, or $3,000 or an amount equal to 20% of the annual payment is available immediately upon entering the contract.

The legislation also reauthorizes the Conservation Reserve Program through 2006 and increases the acreage limit to 40 million acres from 36.4 million acres but prohibits enrollment of lands that do not have a cropping history during the last three of six years and prohibits landowners with lands enrolled in CRP from breaking out new highly erodible lands without a cropping history unless the land is being used as a homestead or a building site at the time of purchase of the land. The legislation further opens enrollment of lands without cropping history into both the Conservation Reserve Enhancement Program and the continuous enrollment CRP and requires USDA to provide equal incentive payments for all continuous practices.

Producers would be allowed to enroll full parcels through the continuous CRP as buffers in cases in which more than 50% of the parcel is eligible for enrollment. The legislation also allows USDA to extend hardwood tree contracts, permanently authorizes the Wetlands Pilot Program, allows haying and grazing on continuous lands for management purposes, and allows wind turbines on lands enrolled through general sign-up.

The legislation removes restrictions on the funding provided for technical assistance to carry out conservation programs (i.e. strikes the Section 11 cap).

For the Wetlands Reserve Program, the legislation raises the total acreage cap by 1.25 million acres of wetlands in the program and requires USDA to enroll 250,000 acres annually for fiscal years 2002-06, to the maximum extent possible. The legislation further allows USDA to enroll up to 25,000 acres of the 250,000 acres annually through the Wetlands Reserve Enhancement Program which enables the USDA to coordinate with state and local governments and private organizations to focus resources on critical environmental needs, including water quality and wildlife habitat.

The legislation also reauthorizes the Environmental Quality Incentive Program (EQIP) through fiscal year 2006 to allow USDA to provide technical assistance, cost-share and incentive payments to eligible producers. The legislation allows USDA to dedicate up to 5% of total funds to be used for special projects in watersheds and other areas of regional significance, including for water conservation and irrigation projects to increase water management, nutrient reduction and wildlife habitat. In addition, USDA may use up to $100 million annually for conservation innovation grants to encourage public and private entities to use federal funds as leverage for the development of innovative practices.

Also, the legislation reduces the EQIP minimum contract length to three years from five years, eliminates the procedure for producers to bid down payment rates, provides for contract payments during the first year of the contract, and provides increased cost-share assistance of 90% to limited resource and beginning producers.

The legislation sets the total amount an individual may receive under an EQIP contract at $150,000, with an annual limit of $50,000. The legislation allows not more than one contract for structural practices involving livestock nutrient management for a producer during the five-year period of the farm bill and requires a comprehensive nutrient management plan.

Also, the bill would establish a new program to purchase 30-year and permanent easements and for 30 year rental agreements on up to 1 million acres of natural grass and shrub lands (at least 100 contiguous acres west of the 98th meridian and 40 acres east of the 98th meridian) indigenous to a locality to limit conversion of grazing lands.

A detailed description of all titles in the bill, including conservation, is located elsewhere on the agriculturelaw.com web site.