Conservation Security Program
Despite Cost Controls, Improved USDA Management Is Needed to Ensure Proper Payments and Reduce Duplication with Other Programs Gao ID: GAO-06-312 April 28, 2006The Conservation Security Program (CSP)--called for in the 2002 farm bill and administered by the U.S. Department of Agriculture's (USDA) Natural Resources Conservation Service (NRCS)--provides financial assistance to producers to reward past conservation actions and to encourage further conservation stewardship. CSP payments may be made for structural or land management practices, such as strip cropping to reduce erosion. CSP has raised concerns among some stakeholders because CSP cost estimates generally have increased since the 2002 farm bill's enactment. For example, the Congressional Budget Office's estimate increased from $2 billion in 2002 to $8.9 billion in 2004. GAO determined (1) why CSP cost estimates generally increased; (2) what authority USDA has to control costs and what cost control measures exist; and (3) what measures exist to prevent duplication between CSP and other USDA conservation programs and what duplication, if any, has occurred.
Various factors explain why estimates of CSP costs generally increased since the 2002 farm bill's enactment. Of most importance, little information was available regarding how this program would be implemented at the time of its inception in 2002. As more information became available, cost estimates rose. In addition, the time frames on which the estimates were based changed. While the initial estimates covered years in which the program was expected to be nonoperational or minimally operational, subsequent estimates did not include these years. The farm bill provides USDA general authority to control CSP costs, including authority to establish criteria that enable it to control program participation and payments and, therefore, CSP costs. For example, NRCS restricts participation by limiting program enrollment each year to producers in specified, priority watersheds. NRCS also has established certain CSP payment limits at levels below the maximum allowed by the statute. However, efforts to control CSP spending could be improved by addressing weaknesses in internal controls and inconsistencies in the wildlife habitat assessment criteria that NRCS state offices use, in part, to determine producer eligibility for the highest CSP payment level. Inconsistencies in these criteria also may reduce CSP's conservation benefits. The farm bill prohibits duplicate payments for the same practice on the same land made through CSP and another USDA conservation program. Various other farm bill provisions also reduce the potential for duplication. For example, as called for under the farm bill, CSP may reward producers for conservation actions they have already taken, whereas other programs generally provide assistance to encourage new actions or to idle or retire environmentally sensitive land from production. In addition, CSP regulations establish higher minimum eligibility requirements for CSP than for other programs. However, despite these legislative and regulatory provisions, the possibility that producers can receive duplicate payments remains because of similarities in the conservation actions financed through these programs. In addition, NRCS does not have a comprehensive process to preclude or identify such duplicate payments. In reviewing NRCS's payments data, GAO found a number of examples of duplicate payments.
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Director: Team: Phone:GAO-06-312, Conservation Security Program: Despite Cost Controls, Improved USDA Management Is Needed to Ensure Proper Payments and Reduce Duplication with Other Programs
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Report to the Chairman, Committee on Appropriations, U.S. Senate:
April 2006:
Conservation Security Program:
Despite Cost Controls, Improved USDA Management Is Needed to Ensure
Proper Payments and Reduce Duplication with Other Programs:
GAO-06-312:
GAO Highlights:
Highlights of GAO-06-312, a report to the Chairman, Committee on
Appropriations, U.S. Senate.
Why GAO Did This Study:
The Conservation Security Program (CSP)”called for in the 2002 farm
bill and administered by the U.S. Department of Agriculture‘s (USDA)
Natural Resources Conservation Service (NRCS)”provides financial
assistance to producers to reward past conservation actions and to
encourage further conservation stewardship. CSP payments may be made
for structural or land management practices, such as strip cropping to
reduce erosion. CSP has raised concerns among some stakeholders because
CSP cost estimates generally have increased since the 2002 farm bill‘s
enactment. For example, the Congressional Budget Office‘s estimate
increased from $2 billion in 2002 to $8.9 billion in 2004.
GAO determined (1) why CSP cost estimates generally increased; (2) what
authority USDA has to control costs and what cost control measures
exist; and (3) what measures exist to prevent duplication between CSP
and other USDA conservation programs and what duplication, if any, has
occurred.
What GAO Found:
Various factors explain why estimates of CSP costs generally increased
since the 2002 farm bill‘s enactment. Of most importance, little
information was available regarding how this program would be
implemented at the time of its inception in 2002. As more information
became available, cost estimates rose. In addition, the time frames on
which the estimates were based changed. While the initial estimates
covered years in which the program was expected to be nonoperational or
minimally operational, subsequent estimates did not include these
years.
The farm bill provides USDA general authority to control CSP costs,
including authority to establish criteria that enable it to control
program participation and payments and, therefore, CSP costs. For
example, NRCS restricts participation by limiting program enrollment
each year to producers in specified, priority watersheds. NRCS also has
established certain CSP payment limits at levels below the maximum
allowed by the statute. However, efforts to control CSP spending could
be improved by addressing weaknesses in internal controls and
inconsistencies in the wildlife habitat assessment criteria that NRCS
state offices use, in part, to determine producer eligibility for the
highest CSP payment level. Inconsistencies in these criteria also may
reduce CSP‘s conservation benefits.
The farm bill prohibits duplicate payments for the same practice on the
same land made through CSP and another USDA conservation program.
Various other farm bill provisions also reduce the potential for
duplication. For example, as called for under the farm bill, CSP may
reward producers for conservation actions they have already taken,
whereas other programs generally provide assistance to encourage new
actions or to idle or retire environmentally sensitive land from
production. In addition, CSP regulations establish higher minimum
eligibility requirements for CSP than for other programs. However,
despite these legislative and regulatory provisions, the possibility
that producers can receive duplicate payments remains because of
similarities in the conservation actions financed through these
programs. In addition, NRCS does not have a comprehensive process to
preclude or identify such duplicate payments. In reviewing NRCS‘s
payments data, GAO found a number of examples of duplicate payments.
Figure: Strip Cropping to Reduce Soil Erosion:
[See PDF for Image]
[End of Figure]
What GAO Recommends:
GAO recommends, in part, that NRCS review its state offices‘ wildlife
habitat assessment criteria and develop a process to preclude and
identify duplicate payments. NRCS generally agreed with GAO‘s findings
and recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-312].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robert A. Robinson at
(202) 512-3841 or robinsonr@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Estimates of CSP Costs Generally Increased because of Better
Information on Program Implementation and Changes to the Time Frames
Covered by the Estimates:
USDA Has Authority to Control CSP Costs and Has Established Cost
Control Measures but Needs to Improve Internal Controls and Better
Ensure Consistency in NRCS State Offices' Determinations of Producer
Eligibility:
Despite Legislative and Regulatory Measures That Lessen Possible
Duplication between CSP and Other Programs, the Potential for Duplicate
Payments Still Exists, and Such Payments Have Occurred:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: CSP Payments Information for Fiscal Years 2004 and 2005:
Appendix III: CSP Application and Enrollment Process Flowchart:
Appendix IV: Other Key USDA Conservation Programs:
Appendix V: Explanation of Budget Scoring:
Appendix VI: Time Line of Legislative Actions and CBO and OMB 10-Year
Estimates of CSP Costs:
Appendix VII: Description of USDA and NRCS Internal Controls and the
Results of Reviews of These Controls:
Appendix VIII: Comments from the U.S. Department of Agriculture:
GAO Comments:
Appendix IX: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: CSP Payment Tiers:
Table 2: CBO's CSP Cost Estimates, Fiscal Years 2002 through 2016:
Table 3: OMB's CSP Cost Estimates, Fiscal Years 2002 through 2016:
Table 4: Key Farm Bill and Regulatory Cost Control Measures Used in the
Fiscal Year 2005 CSP Sign-up:
Table 5: Tier III Contracts and Payments by Watershed, Fiscal Year
2004:
Table 6: Conservation Payments Available through CSP, EQIP, and WHIP:
Table 7: Priority Watersheds, Lead NRCS State Offices, and CSP
Contracts Awarded in the Fiscal Year 2004 CSP Sign-up:
Table 8: Total CSP Payments and Contracts by Tier, Fiscal Year 2004:
Table 9: Total CSP Payments by Payment Type, Fiscal Year 2004:
Table 10: Total CSP Enhancement Payments by Enhancement Type, Fiscal
Year 2004:
Table 11: Distribution of All CSP Contracts by Payment Range (Excluding
and Including Advance Enhancement Payments in Contract Amounts), Fiscal
Year 2004:
Table 12: Distribution of Tier I CSP Contracts by Payment Range
(Excluding and Including Advance Enhancement Payments in Contract
Amounts), Fiscal Year 2004:
Table 13: Distribution of Tier II CSP Contracts by Payment Range
(Excluding and Including Advance Enhancement Payments in Contract
Amounts), Fiscal Year 2004:
Table 14: Distribution of Tier III CSP Contracts by Payment Range
(Excluding and Including Advance Enhancement Payments in Contract
Amounts), Fiscal Year 2004:
Table 15: Total CSP Payments and Contracts by Tier, Fiscal Year 2005:
Table 16: Total CSP Payments by Payment Type, Fiscal Year 2005:
Table 17: Total CSP Enhancement Payments by Enhancement Type, Fiscal
Year 2005:
Table 18: Distribution of CSP Contracts by Payment Range, Fiscal Year
2005:
Table 19: Acres Enrolled in CSP by Land Type, Fiscal Years 2004 and
2005:
Table 20: Description of Other Key USDA Conservation Programs:
Figures:
Figure 1: Watersheds Included in the Fiscal Year 2004 and Fiscal Year
2005 CSP Sign-ups:
Figure 2: Comparison of CBO and OMB 10-Year Estimates of CSP Costs:
Abbreviations:
CBO: Congressional Budget Office:
CCC: Commodity Credit Corporation:
CRS: Congressional Research Service:
CSP: Conservation Security Program:
EQIP: Environmental Quality Incentives Program:
IG: Inspector General:
NRCS: Natural Resources Conservation Service:
O&E: Oversight and Evaluation:
OMB: Office of Management and Budget:
USDA: U.S. Department of Agriculture:
WHIP: Wildlife Habitat Incentives Program:
Letter:
April 28, 2006:
The Honorable Thad Cochran:
Chairman:
Committee on Appropriations:
United States Senate:
Dear Mr. Chairman:
Farmers and ranchers own and manage about 940 million acres, or about
half of the continental United States' land area, and are thus among
the most important stewards of our soil, water, and wildlife habitat.
Because of this important responsibility, how private land is used is
increasingly recognized as vital to protecting the nation's environment
and natural resources. For example, to help protect water quality and
conserve wildlife habitat, private landowners have installed millions
of acres of conservation buffers.[Footnote 1] Despite these efforts,
state water-quality agencies report that agricultural production is
still a leading contributor to impaired water quality; similarly,
habitat loss associated with agriculture has been a factor in the
declining populations of numerous wildlife species, including many
threatened or endangered native species. Recognizing the critical role
played by private landowners, Congress significantly increased
authorized funding for an array of conservation programs managed by the
U.S. Department of Agriculture (USDA) in the Farm Security and Rural
Investment Act of 2002 (farm bill).[Footnote 2] Specifically, Congress
authorized additional funding for these programs for fiscal years 2002
through 2007, estimated by the Congressional Budget Office (CBO) to be
$20.8 billion, nearly an 80 percent increase over the previous baseline
for these programs.[Footnote 3] Part of this increase was for several
new conservation programs called for by the farm bill, including the
Conservation Security Program (CSP).
CSP supports ongoing conservation stewardship of agricultural lands by
providing financial and technical assistance to promote conservation
and the improvement of soil, water, air, energy, and plant and animal
life on private and tribal agricultural lands. Unlike other USDA
conservation programs that provide assistance to take new actions aimed
at addressing identified problems such as excessive soil erosion or
nutrient runoff, CSP is unique in that it rewards farmers and ranchers
who already meet very high standards of conservation and environmental
management in their operations. The program seeks to encourage these
producers to continue and further enhance their high level of
stewardship while creating an incentive for other producers to increase
their level of stewardship in order to qualify for CSP assistance as
well. CSP is also unique among USDA conservation programs in that
Congress authorized it without placing limits on either its funding or
the number of acres enrolled, although at times Congress has capped its
funding in other legislation.[Footnote 4] CSP is open to all eligible
agricultural producers, regardless of size of operation, crops
produced, or geographic location. CSP is administered by USDA's Natural
Resources Conservation Service (NRCS) and funded through USDA's
Commodity Credit Corporation (CCC).[Footnote 5]
CSP rewards three levels, or tiers, of conservation treatment for
qualified producers who enter into CSP contracts with NRCS.[Footnote 6]
Tier I participants must have addressed soil and water quality resource
concerns to a specified minimum level of treatment on at least part of
the participant's operation prior to applying to the program.[Footnote
7] Under this tier, contracts are of 5-year duration, and annual
payments of up to $20,000 are to be made. Tier II participants must
have addressed soil and water quality resource concerns to the minimum
level of treatment on the entire agricultural operation prior to
application and must treat an additional significant resource concern
as well. Under this tier, contracts are of a 5-to 10-year duration, and
annual payments of up to $35,000 are to be made. In addition to
addressing soil and water quality resource concerns to specified
minimum levels, Tier III participants must have addressed all other
applicable resource concerns, including wildlife habitat, to a minimum
level on their entire agricultural operation before application. These
additional resource concerns are described in the CSP sign-up
notice,[Footnote 8] and the related criteria for the minimum treatment
levels are provided in CSP regulations and may be further augmented by
NRCS state offices to reflect local conditions. For example, for the
fiscal year 2004 and fiscal year 2005 CSP sign-ups, wildlife habitat
management was identified as an applicable resource concern in the sign-
up notices. Under Tier III, contracts are of a 5-to 10-year duration,
and annual payments of up to $45,000 are to be made.
Regardless of the tier, a producer's total CSP contract payment may
include up to four components: (1) an annual stewardship component for
the base level of conservation treatment required for program
eligibility,[Footnote 9] (2) an annual existing practice component for
the maintenance of existing conservation practices,[Footnote 10] (3) an
annual enhancement component for additional activities that provide
increased resource benefits beyond the base level of conservation
treatment that is required for program eligibility,[Footnote 11] and
(4) a one-time new practice component for additional approved
practices.[Footnote 12] In determining which CSP contract applications
to accept, NRCS first determines whether an application meets the
minimum requirements for Tier I, II, or III. NRCS then groups qualified
applications into one of five enrollment categories--defined by
criteria such as a producer's willingness to undertake additional
conservation activities--and funds the applications beginning with the
highest category in each tier until the available funding is exhausted.
The farm bill requires NRCS to provide technical assistance to
producers for the development and implementation of conservation
security contracts but in an amount not to exceed 15 percent of amounts
expended for the fiscal year.[Footnote 13]
NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200
farmers and ranchers participated in the program that year, with
contracts covering nearly 1.9 million acres in 18 watersheds in 22
states. Producer payments totaled about $34.6 million in fiscal year
2004. For fiscal year 2005, NRCS approved over 12,700 CSP contract
applications, covering over 9 million acres in 220 watersheds in 50
states and Puerto Rico. Producer payments totaled about $171.4 million
(including payments for contacts approved in 2004) in fiscal year 2005.
In January 2006, USDA announced that it plans to offer CSP contracts to
producers in an additional 60 watersheds during fiscal year 2006, with
participants receiving an estimated $220 million (including payments
for contracts approved in 2004 and 2005). Over time, NRCS plans to
accept CSP contract applications from eligible producers in each of the
nation's 2,119 watersheds.[Footnote 14]
CSP has attracted considerable interest by stakeholders in Congress and
in farm, conservation, and environmental organizations for a variety of
reasons. Notably, cost estimates for CSP generally have increased since
the program's inception, and some stakeholders are concerned that CSP
may duplicate assistance provided under other USDA conservation
programs. Regarding program costs, estimates made by CBO and the Office
of Management and Budget (OMB) generally have increased over time. For
example, in May 2002, CBO estimated CSP would cost about $2 billion
over 10 years. CBO revised its 10-year cost estimate to $7.8 billion in
January 2003 and then increased it again to $8.9 billion in March 2004.
OMB's estimates also increased. In May 2002, OMB estimated CSP would
cost $5.9 billion over 10 years. OMB increased its estimate to $9.7
billion in January 2004. Regarding potential program duplication, some
stakeholders note that CSP and other USDA conservation programs appear
to provide financial and technical assistance for similar conservation
activities, such as creating conservation buffers around cropped
fields, creating the possibility that a producer could receive
duplicate payments for the same activity.
In this context, you asked us to determine (1) why CBO and OMB cost
estimates for CSP generally increased over time; (2) what authority
USDA has to control CSP costs and what cost control measures are in
place; and (3) what legislative and regulatory measures exist to
prevent duplication between CSP and other USDA conservation programs
and what duplication, if any, has occurred.
To determine why CSP costs estimates have increased, we interviewed CBO
and OMB officials and reviewed documentation they provided. We did not
attempt to re-estimate or audit the CBO or OMB estimates or data
discussed in this report. To determine USDA's authority to control CSP
costs and the cost control measures implemented, we reviewed relevant
legislation, CSP regulations, and NRCS's Conservation Programs Manual
and related guidance. We also interviewed NRCS and other USDA officials
and reviewed documentation they provided. To determine what legislative
and regulatory measures exist to prevent duplication between CSP and
other conservation programs and what duplication, if any, has occurred,
we reviewed relevant authorizing legislation and CSP regulations. We
also interviewed NRCS and other USDA officials and reviewed the
documents they provided. In addition, we interviewed NRCS officials
specifically responsible for developing a plan to coordinate USDA's
conservation programs to, among other things, eliminate redundancy.
Furthermore, to identify apparent cases of duplication, we reviewed and
analyzed 2004 payments data for CSP and two other USDA conservation
programs that also provide assistance to implement conservation
practices on land used for agricultural production. We then discussed
these cases with NRCS officials to determine the extent of duplication,
if any. Finally, we interviewed officials and reviewed documentation
they provided at farm, conservation, and environmental organizations.
We conducted our review from February 2005 through February 2006 in
accordance with generally accepted government auditing standards.
Appendix I provides additional information on our objectives, scope,
and methodology.
Results in Brief:
Various factors explain why CBO and OMB estimates of CSP costs
generally have increased over time. Most importantly, agency officials
indicated that little information was available regarding how the
program would be implemented at the time of the original cost estimates
in May 2002. Consequently, these officials relied on their professional
judgment and past experience with estimating costs when making
assumptions about key aspects of CSP, such as the level of
participation, number of acres enrolled, and the amount and types of
payments made. Later, when more information became available as to how
USDA planned to implement the program, officials' estimates were better
informed and more accurately captured program costs, resulting in
higher estimates. In addition, increases in estimated CSP costs also
can be attributed to revising the time frames on which the estimates
were based. The agencies' initial estimates were based on the 10-year
period fiscal years 2002 through 2011 and included years in which the
program was not operational (2002 and 2003) or minimally operational
(2004). The agencies' subsequent estimates were based on different 10-
year intervals. For example, CBO's and OMB's fiscal year 2004 estimates
were based on the 10-year period fiscal years 2005 through 2014 and
assumed the program would be fully operational in each of these years.
The farm bill provides USDA general authority to control CSP costs, and
while USDA has used its statutory authority to establish several cost
control measures, its efforts to control program spending may be
enhanced by addressing (1) weaknesses in internal controls used to
ensure the accuracy of program payments and (2) inconsistencies in the
wildlife resource criteria used by NRCS state offices to determine
producer eligibility for Tier III, the highest CSP payment level. More
specifically,
* the farm bill establishes some eligibility requirements for CSP, but
gives USDA the authority to establish additional requirements. For
example, the farm bill states that a payment under CSP "may" be
received under three tiers of conservation contracts and that the
Secretary of Agriculture "shall" determine and approve the minimum
requirements for each tier. Furthermore, under the legislation,
payments for each tier are not to exceed specified amounts, giving the
Secretary of Agriculture the discretion to set payments for each tier
below these limits. Under this statutory authority, NRCS implemented a
number of CSP cost control measures to restrain program spending
primarily by either restricting participation or limiting payments to
individual producers. For example, NRCS restricts CSP participation by
limiting program enrollment each year to producers in specified,
priority watersheds. In addition, NRCS limits annual stewardship
payments to 25, 50, and 75 percent of the maximum amount that the farm
bill allows for Tiers I, II, and III, respectively.
* NRCS's cost control efforts may be undermined by weaknesses in the
internal controls the agency uses to ensure accurate program payments.
According to a January 2006 draft report, NRCS internal auditors found
problems with several aspects of the agency's implementation of CSP,
including its implementation of some internal controls. Among other
things, the auditors found weaknesses in quality assurance and case
file documentation. For example, they found that 33 of 55 fiscal year
2004 CSP contracts studied had not had an annual contract review, as
required by NRCS's programs manual, to document that CSP participants
are following contract provisions. The absence of an annual contract
review, according to the internal auditors, could result in payments
being made for conservation activities that are not being done or are
not yet completed as scheduled in the producer's conservation security
plan. NRCS plans to prepare a management action plan describing its
response to this draft report's recommendations. In addition, other
aspects of NRCS's internal controls have been criticized. For example,
in January 2005, the USDA Inspector General reported that NRCS had
neither identified the internal control measures in place to preclude,
or detect in a timely manner, improper payments for the programs it
administers, including CSP, nor did it know if the controls were in
operation.
* NRCS's cost control efforts also may be undermined by inconsistencies
in the wildlife habitat assessment criteria used by NRCS state offices,
in part, to determine producer eligibility for Tier III payments. For
the fiscal year 2004 CSP sign-up, according to NRCS, state offices
developed wildlife habitat assessment criteria that were extremely
variable, contributing significantly to differences in Tier III
participation and payments among the various watersheds. For example,
among the nine watersheds where cropland was the predominant type of
land enrolled, the percentage of payments going to Tier III contracts
ranged from 0 to 75 percent. In response, NRCS developed national
guidance that its state offices were to follow in creating wildlife
habitat assessment criteria. However, we found--and NRCS officials
agreed--that some state offices developed and applied criteria for the
fiscal year 2005 sign-up that were inconsistent with the national
guidance. For example, the criteria used in watersheds under these
states' jurisdiction did not require that a minimum percentage (as
determined by the relevant state office) of a producer's operation be
noncrop vegetative cover, such as grassy or riparian areas managed for
wildlife, as specified in the national guidance. Thus, producers in
these watersheds were eligible for Tier III payments even though they
may not have satisfied criteria for one of the resource components that
the national guidance specifies is necessary for eligibility. Moreover,
an NRCS official explained that although NRCS has not undertaken a
review to determine whether producers have qualified for Tier III
payments under this scenario, based on informal discussions with field
office staff, this official concluded that some producers received such
payments during the fiscal years 2004 and 2005 sign-ups. Finally, the
use of criteria that are inconsistent with the national guidance not
only weakens CSP cost control measures by making more Tier III payments
possible, it also reduces NRCS's ability to ensure that CSP is
achieving its intended wildlife habitat benefits. Despite the possible
undesirable outcomes associated with inconsistencies in state offices'
wildlife habitat assessment criteria, as of February 2006, NRCS had not
reviewed or field tested each state office's criteria and did not have
plans to do so. In addition, NRCS has not incorporated a reference to
the national guidance in its Conservation Programs Manual used by the
agency's field staff.
Various legislative and regulatory measures exist to reduce the
potential for duplication between CSP and other USDA conservation
programs; however, the possibility that producers can receive duplicate
payments for the same conservation action from CSP and other programs
remains. Specifically, the farm bill explicitly prohibits duplicate
payments under CSP and other conservation programs for the same
practice on the same land. The farm bill also prohibits NRCS from
making payments under CSP for certain activities that can be funded
under other conservation programs, such as the construction or
maintenance of animal waste storage or treatment facilities.
Furthermore, NRCS designed its CSP regulations to prevent duplication
between CSP and other conservation programs. For example, the
regulations establish higher minimum eligibility standards for CSP than
exist for other programs, helping to differentiate the applicant pool
for CSP from the potential applicants for these other programs. The
regulations also encourage CSP participants to implement conservation
actions, known as enhancements, intended to achieve a level of
treatment that generally exceeds the level required by other USDA
conservation programs. However, despite statutory provisions and NRCS
actions designed to prevent CSP from duplicating other programs, the
potential for duplicate payments still exists and duplicate payments
have occurred. In particular, payments for CSP's conservation
enhancements--which represented about 81 percent of total CSP payments
in fiscal years 2004 and 2005--could duplicate payments for other
programs' conservation practices. For example, in the course of
performing limited file reviews at several NRCS field offices, we found
a case where a producer received payments under CSP and another program
in 2004 for the same conservation activity--establishing a small grain
cover crop--on the same tract of land. Furthermore, our analysis of
2004 payments data for CSP and two other USDA conservation programs
revealed other potential examples of duplicate payments. Specifically,
we found 121 cases of payments that were made under CSP and another
program that year that were potentially duplicates. We then selected 12
of these cases for further investigation, and we found that in 8 cases
duplicate payments had occurred. NRCS officials acknowledged that
duplicate payments had occurred in 4 of these cases but did not agree
in the other 4 cases. Finally, NRCS officials stated the agency lacks a
comprehensive process to either preclude duplicate payments or identify
them after a contract has been awarded. Instead, these officials said
that NRCS relies on the institutional knowledge of its field staff and
the records they keep as a guard against potential duplication.
In light of these findings, we are recommending that USDA direct NRCS
to (1) review its state offices' wildlife habitat assessment criteria
to ensure consistency with the agency's national guidance for
developing these criteria; (2) include a reference to the national
guidance in its Conservation Programs Manual to emphasize the
importance of this guidance; (3) establish a comprehensive process to
identify potential duplicate payments in the future, as well as such
payments that already may have been made under existing CSP contracts;
and (4) take action to recover duplicate payments already made.
In commenting on a draft of this report, NRCS generally agreed with the
findings and recommendations and provided information on actions it has
taken, is taking, or will take to implement them. NRCS's comments are
reprinted in appendix VIII. NRCS also provided us with suggested
technical corrections, which we incorporated into this report as
appropriate.
We also provided a draft of this report to CBO and OMB for review and
comment. Their clarifying comments were incorporated into this report
as appropriate.
Background:
CSP, called for under section 2001 of the 2002 farm bill,[Footnote 15]
is a voluntary conservation program that supports ongoing stewardship
of private and tribal agricultural lands by providing payments to
producers for maintaining and enhancing natural resources. According to
USDA, CSP identifies and rewards those farmers and ranchers who are
meeting the highest standards of conservation and environmental
management on their operations, while creating powerful incentives for
other producers to meet those same standards of conservation
performance. In turn, the conservation benefits gained will help these
farms and ranches to be more economically and environmentally
sustainable while increasing natural resources benefits to society at
large.
CSP provides financial and technical assistance to agricultural
producers who advance the conservation and improvement of soil, water,
air, energy, plant and animal life, and other conservation purposes on
working lands. Such lands include cropland, grassland, prairie land,
improved pasture, and rangeland, as well as forested land and other
noncropped areas that are an incidental part of the agriculture
operation. The program is available in all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of
the United States, American Samoa, the Commonwealth of the Northern
Marianna Islands, and the Trust Territory of the Pacific Islands. Under
the farm bill, the program is open to all agricultural producers,
regardless of size of operation, crops produced, or geographic
location. CSP is administered by NRCS.
In implementing CSP, NRCS emphasizes soil and water quality as
nationally important resource concerns because of the potential for
significant environmental benefits from conservation treatment that
improves their condition. Thus, although the farm bill required
producers to treat at least one resource of concern under CSP, NRCS
program regulations require producers to treat at least two resources-
-soil and water--to be eligible for the program.[Footnote 16] Producers
can use CSP payments to fund a variety of soil and water quality
conservation practices. Soil quality practices include crop rotation,
planting cover crops, tillage practices, prescribed grazing, and
providing adequate wind barriers. Water quality practices include
conservation tillage, strip cropping, vegetative filter strips,
terraces, grassed waterways, managed access to water courses, nutrient
and pesticide management, prescribed grazing, and irrigation water
management. In addition, under the farm bill and NRCS regulations, to
be eligible for CSP, both the producer and the producer's operation
must first meet several basic eligibility criteria, including (1) the
land must be private agricultural land, forested land that is an
incidental part of an agricultural operation, or tribal land with the
majority of the land located within a selected priority watershed; (2)
the applicant must be in compliance with highly erodible land and
wetlands provisions of the Food Security Act of 1985 and generally must
have control of the land for the life of the contract; and (3) the
applicant must share in the risk of producing any crop or livestock and
be entitled to a share in the crop or livestock available for marketing
from the operation.
The farm bill establishes three tiers or levels of participation. Each
tier has a specified contract period and an annual payment limit and
calls for a plan addressing resources of concern (as further delineated
in NRCS regulations), as indicated in table 1.
Table 1: CSP Payment Tiers:
Annual payment limit.
Tier: I;
Contract period: (years): 5;
Annual payment limit: $20,000;
Conservation criteria: (The producer must have addressed—): water and
soil quality to meet specified minimum levels of treatment on part of
the agricultural operation prior to enrollment.
Tier: II;
Contract period: (years): 5 to 10;
Annual payment limit: $35,000;
Conservation criteria: (The producer must have addressed—): water and
soil quality to meet specified minimum levels of treatment on the
entire agricultural operation prior to enrollment and agree to address
at least one additional locally significant resource concern by the end
of the contract.[A].
Tier: III;
Contract period: (years): 5 to 10;
Annual payment limit: $45,000;
Conservation criteria: (The producer must have addressed—): all
existing resource concerns to meet specified minimum levels of
treatment on the entire agricultural operation.
Source: 2002 farm bill and NRCS's CSP regulations.
[A] Producers can satisfy the requirement to address an additional
resource of concern by demonstrating that the locally significant
resource concern is not applicable to their operation or that they have
already addressed it in accordance with NRCS's quality criteria.
[End of table]
In addition to these tiers, NRCS's program regulations and sign-up
announcements establish enrollment categories and subcategories. Under
NRCS regulations, enrollment categories may be defined by criteria
related to resource concerns and levels of historic conservation
treatment, including a producer's willingness to achieve additional
environmental performance or conduct conservation enhancement
activities. For the fiscal year 2005 sign-up, five enrollment
categories (A through E) were used for cropland, pasture, and
rangeland. For example, for cropland, the enrollment categories were
defined by various levels of soil conditioning index scores and the
number of stewardship practices and activities in place on the farm for
at least 2 years.[Footnote 17] All applications that met the sign-up
criteria were placed in an enrollment category, regardless of available
funding. NRCS then funded all eligible producers enrolled in category A
before funding producers in category B and subsequent categories until
available funding was exhausted.[Footnote 18] If an enrollment category
could not be fully funded, then the subcategories were used to
determine application funding order within a category. For the fiscal
year 2005 sign-up, 12 subcategories were used. These subcategories
included factors such as whether (1) the applicant is a limited
resource producer or a participant in an ongoing environmental
monitoring program; (2) the agricultural operation is in a designated
water conservation area or aquifer zone, drought area, or nonattainment
area for air quality; or (3) the agricultural operation is in a
designated area for threatened and endangered species habitat creation
and protection.
The producer's CSP contract identifies the type and amount of program
payments that a producer will receive. NRCS has established criteria
for calculating each of the four components of the program payment. For
example, the stewardship component is based on the number of acres
enrolled in CSP, the stewardship payment rate established for the
watershed, and reduction factors based on the tier of enrollment. At a
minimum, all CSP contract payments include amounts for the stewardship
and existing practice components. To be eligible to participate in CSP,
the producer must develop a conservation security plan (also known as a
conservation stewardship plan) that identifies the land and resources
to be conserved; describes the tier of conservation security contract
and the particular conservation practices to be implemented,
maintained, or improved; and contains a schedule for the
implementation, maintenance, or improvement of these practices. This
plan must be submitted to and approved by NRCS.
According to NRCS, about 1.8 million farmers and ranchers nationwide
are potentially eligible for CSP. However, the agency has chosen a
staged approach to implementing CSP, based on limiting program sign-ups
to selected, priority watersheds each year.[Footnote 19] In part, this
reflects CSP's newness. As with any new program, there have been
birthing and growing pains as the agency has grappled with developing
program regulations, training its staff, outreaching to producers and
stakeholder groups, and adjusting program implementation based on
lessons learned from one program sign-up year to the next. NRCS also
chose a staged approach in light of limited program funding--Congress
authorized caps for total CSP funding in fiscal year 2004 and for
salaries and expenses of personnel to carry out CSP in fiscal years
2005 and 2006[Footnote 20]--and the statutory limitation on the amount
of CSP funding that can be used for technical assistance--NRCS cannot
incur technical assistance costs in excess of 15 percent of the funds
expended in a given fiscal year for CSP. According to NRCS, focusing on
priority watersheds reduces the administrative burden on applicants and
the costs of processing a large number of applications that cannot be
funded. In addition, the agency notes that everyone in the United
States lives in a watershed and, because each year producers in
approximately one-eighth of the nation's 2,119 watersheds will be
eligible for the sign-up, all eligible producers will have the
opportunity to participate over an 8-year period, subject to available
funding.
NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200
farmers and ranchers participated in the program that year with
contracts covering nearly 1.9 million acres in 18 watersheds in 22
states. Producer payments totaled about $34.6 million in fiscal year
2004, and NRCS used about $5.9 million for technical
assistance.[Footnote 21] For fiscal year 2005, NRCS approved over
12,700 CSP contract applications, covering nearly 9 million acres in
220 watersheds in 50 states and Puerto Rico. These 220 watersheds
included the 18 watersheds covered by the fiscal year 2004 sign-up.
Producer payments totaled about $171.4 million (including payments for
contracts approved in 2004) in fiscal year 2005, and NRCS used about
$30.2 million for technical assistance.[Footnote 22] In January 2006,
USDA announced that it plans to offer CSP contracts to producers in an
additional 60 watersheds during fiscal year 2006, with participants
receiving an estimated $220 million (including payments for contracts
approved in 2004 and 2005).[Footnote 23] More detail on the CSP
payments made in fiscal years 2004 and 2005 is summarized in appendix
II, including information on these payments by tier, payment type, and
enhancement type. Figure 1 shows the watersheds included in the fiscal
year 2004 and fiscal year 2005 CSP sign-ups.
Figure 1: Watersheds Included in the Fiscal Year 2004 and Fiscal Year
2005 CSP Sign-ups:
[See PDF for image]
Note: NRCS allowed the 18 watersheds included in the fiscal year 2004
sign-up to be reopened only for new applicants for the fiscal year 2005
sign-up. This was because NRCS received many complaints from producers
in these watersheds that they did not have sufficient time or did not
know enough about CSP to apply for assistance under the program in the
fiscal year 2004 sign-up. The arrows denote some of the smaller
watersheds included in the fiscal year 2005 sign-up.
[End of figure]
In general, NRCS implements CSP by (1) offering periodic sign-ups in
specific, priority watersheds across the Nation; (2) requiring
producers to complete a self-assessment, including a description of
conservation activities on their operations, to determine their
eligibility for the program;[Footnote 24] (3) scheduling interviews
with eligible producers in local NRCS field offices to review the
producers' applications; (4) determining which program tier and
enrollment category an eligible producer may participate in; (5)
selecting the enrollment categories to be funded for CSP contracts; (6)
developing conservation security plans and contracts for the producers
selected; and (7) making the associated payments. Appendix III provides
a flowchart describing the CSP application and enrollment process in
more detail. Applicants may submit only one application for each sign-
up. Producers who are participants in an existing CSP conservation
stewardship contract are not eligible to submit another application.
Many stakeholders refer to CSP as an "entitlement" program.[Footnote
25] However, the farm bill does not refer to the creation of any
entitlements under the program. Moreover, the legislation provides the
Secretary of Agriculture with discretion to establish additional
eligibility requirements, provides that the Secretary must approve a
producer's conservation security plan before entering into a
conservation security contract, and only states that payments "may" be
received under three tiers of contracts. Thus, CSP is not an
entitlement program.
Finally, many proponents of CSP maintain that this program will help
U.S. producers stay competitive in the world market while providing
significant societal environmental benefits. These proponents note that
traditional farm commodity programs tend to distort trade and will thus
face increasing pressure for reduction or elimination in the next round
of World Trade Organization talks.[Footnote 26] However, they note,
"green payments" programs such as CSP that are designed to promote
conservation and stewardship of natural resources on working lands are
more likely to survive in these talks.[Footnote 27] They also maintain
that several European countries are far ahead of the United States in
using green payments programs to provide financial assistance to their
producers while promoting conservation and environmental stewardship.
CSP is generally regarded as the most comprehensive green payments
program developed in the United States, primarily because CSP promotes
integrated, whole-farm planning for conservation.
Information on other USDA conservation programs is presented in
appendix IV.
Estimates of CSP Costs Generally Increased because of Better
Information on Program Implementation and Changes to the Time Frames
Covered by the Estimates:
Various factors explain why CBO and OMB estimates of CSP costs
generally have increased over time. Of most importance, CBO and OMB
officials indicated that little information was available regarding how
the program would be implemented at the time of its inception in May
2002. Subsequent estimates have been better informed because USDA had
developed and implemented program regulations and had data on the
number of participants from program sign-ups. In addition, increases in
estimated CSP costs also can be attributed to revising the time frames
on which the estimates were based. In general, this involved replacing
estimates from earlier years during which the program was not
operational, or minimally operational, with later years during which
the program is expected to be more fully operational.
Estimates of CSP Costs Generally Have Increased over Time:
Over time, CBO and OMB each made several estimates of CSP costs for
specified 10-year periods, and these estimates generally
increased.[Footnote 28] CBO and OMB developed these estimates as part
of their responsibilities for budget scoring (also known as
scorekeeping). These responsibilities are discussed in appendix V. As
reflected in figure 2, CBO and OMB estimates generally increased during
the period 2001 through 2006, although at times the estimates dropped
because of legislative actions to cap or limit CSP funding. Appendix VI
also provides a more detailed time line of legislative actions and CBO
and OMB 10-year estimates of CSP costs during the period 2001 through
2006.
Figure 2: Comparison of CBO and OMB 10-Year Estimates of CSP Costs:
[See PDF for image]
Notes: (1) CBO's December 2001 estimate was based on an early Senate
version of the farm bill, S. 1731. The farm bill, which called for
establishment of CSP, was enacted into law on May 13, 2002. (2) The
Deficit Reduction Act of 2005 repealed the $6.0 ($6.037) billion cap
for fiscal years 2005 through 2014. Instead, the act limits CSP
spending to $1.954 billion for fiscal years 2006 through 2010 and to
$5.650 billion for fiscal years 2006 through 2015.
[End of figure]
As shown in the figure, CBO made its first estimate of CSP costs--$3.7
billion for fiscal years 2002 through 2011--in December 2001, about 5
months before the farm bill was enacted (May 13, 2002). At the time,
CBO based its estimate on the Senate's version of the farm bill; the
House of Representative's version of the farm bill did not include
provisions for CSP at that time.[Footnote 29] In early May 2002, just
before the farm bill's enactment, CBO estimated CSP costs to be $2
billion for the same 10-year period. CBO officials cited changes in the
final bill's provisions as the basis for the reduction in its
estimate.[Footnote 30] They also cited an agreement they stated had
been reached by members of the Senate Agriculture Committee that only
$2 billion of the new funds to be made available for the farm bill's
conservation title would be used for CSP. The farm bill, as enacted,
does not specifically include a $2 billion limit; however, it does
include language that CBO officials said would result in reducing
program costs to about $2 billion. OMB also made its first estimate of
CSP costs--$5.9 billion for fiscal years 2002 through 2011--in May
2002, soon after the farm bill's enactment. OMB officials said that,
although they were aware of an agreement reached in the Senate to limit
CSP funding to $2 billion, because this limit was not included in the
final legislation, they disregarded it in making their cost estimate.
As a result, OMB's cost estimate was nearly three times larger than
CBO's estimate, although both estimates were made in May 2002, were
based on the same farm bill provisions, and covered the same 10-year
period.
As indicated by the figure, subsequent CBO and OMB estimates of CSP
costs were more similar and generally increased, except in cases where
one or both agencies' estimates reflected legislative actions to cap or
limit CSP funding. For example, in January 2003, CBO estimated CSP
costs to be $7.8 billion for the 10-year period fiscal years 2004
through 2013. In February of that year, Congress enacted legislation
that capped CSP funding at approximately $3.8 billion through fiscal
year 2013 in order to, according to OMB, generate savings for drought
disaster assistance.[Footnote 31] The following month, in light of this
cap, OMB estimated CSP costs to be $3.8 billion for fiscal years 2004
through 2013. However, in January 2004, Congress repealed the $3.8
billion cap.[Footnote 32] As a result, subsequent OMB and CBO estimates
increased substantially.
Congress acted again to cap CSP funding in October 2004, passing
legislation to limit the program's funding to approximately $6 billion
for the 10-year period fiscal years 2005 through 2014.[Footnote 33]
This action was taken to offset emergency supplemental appropriations
for hurricane disaster assistance. Later that month, because of the
cap, OMB estimated CSP costs to be $6 billion for the same period.
However, in January 2004, about 9 months earlier, OMB had estimated the
costs for this 10-year period to be $9.7 billion.
In 2005, both agencies estimated CSP costs to be $6.7 billion for the
10-year period fiscal years 2006 through 2015. In large measure, these
estimates reflected the $6 billion legislative cap covering fiscal
years 2005 through 2014.[Footnote 34] However, that cap was scheduled
to expire at the end of fiscal year 2014, meaning the estimated costs
for fiscal year 2015 were not subject to a cap. In February 2006,
Congress repealed the $6 billion cap, replacing it with caps of $1.954
billion for fiscal years 2006 through 2010 and $5.650 billion for
fiscal years 2006 through 2015.[Footnote 35] The estimate made by OMB
in January 2006--$6.2 billion for fiscal years 2007 through 2016--
anticipated this change. CBO's March 2006 estimate for fiscal years
2007 through 2016 was $6.4 billion.
As More Information on CSP Implementation Became Available, Cost
Estimates Increased:
According to CBO and OMB officials, the primary reason for increases in
their estimates of CSP costs over time is that subsequent estimates
have been better informed. Specifically, subsequent estimates have been
better informed by USDA's development and implementation of program
regulations and data from the results of program sign-ups. As a result,
these estimates more accurately capture program costs, resulting in
higher estimates.
At CSP's inception in May 2002, little information was available about
how it would be implemented and the expected level of producer
participation. CBO and OMB officials noted that the farm bill provided
a basic framework for CSP and only a very limited basis for cost
estimation, giving USDA wide discretion on how to implement the
program. Consequently, these officials had to rely on their
professional judgment and past experience with estimating costs when
making assumptions about key aspects of CSP, such as the level of
participation, number of acres enrolled, land rental rates,[Footnote
36] and the amount and types of payments made. However, according to
CBO and OMB officials, CSP's uniqueness made this more difficult as
these officials had not made cost estimates for a similar program in
the past.
Later, NRCS's development of CSP regulations provided key information
on how the program would be implemented. In this regard, NRCS issued an
advance notice of proposed rulemaking in February 2003; a proposed rule
in January 2004; an interim final rule in June 2004; and an amended
interim final rule in March 2005. For example, the proposed rule
indicated that NRCS planned to limit enrollments to specific sign-up
periods rather than allow continuous sign-ups; limit CSP enrollment to
producers in selected, priority watersheds rather than offer nationwide
enrollment for a given sign-up; and prioritize funding by way of
enrollment categories to ensure that producers with the highest
commitment to conservation are funded first. The amended interim final
rule incorporates each of these elements. In addition, CBO and OMB
officials had informal conversations with NRCS officials to obtain
information on how the agency intended to implement the program. For
example, CBO officials said that they learned that NRCS anticipated
program participation would be greater than it originally expected and
that enhancement payments would be a more important component of total
producer payments than originally planned.[Footnote 37] OMB also
reviewed and commented on NRCS's proposed and interim final rules
before their publication in the Federal Register.[Footnote 38] And CBO
and OMB officials indicated that they conferred with one another from
time to time to discuss issues related to estimating CSP costs,
although the agencies arrived at their estimates independently.
Finally, CBO and OMB officials stated that after making their initial
CSP cost estimates at the program's inception, they had more time to
develop subsequent estimates, including more time to gather and
consider program implementation information. They also said that their
future estimates of program costs will be even better informed as more
data become available from each annual CSP sign-up, including data on
program participation and the mix of payments made by tier and type.
Changing Time Frames Also Account for Increases in Estimates:
CBO and OMB officials also attributed increases in their CSP cost
estimates to revisions in the time frames on which the estimates were
based.[Footnote 39] In making their initial estimates in May 2002, CBO
and OMB took into account a time lag assumed for program development
and implementation by NRCS, which included the time needed for
rulemaking and public comment, training NRCS field staff, and outreach
to producers and stakeholder groups. Thus, these initial estimates,
covering the 10-year period fiscal years 2002 through 2011, included
years in which the program was either not expected to be operational,
such as fiscal years 2002 and 2003, or minimally operational, such as
fiscal year 2004. For example, in CBO's May 2002 estimate, the costs
associated with these first 3 fiscal years totaled only $22 million. In
contrast, CBO's March 2004 estimate, covering a later 10-year period,
fiscal years 2005 through 2014, assumed the program would be fully
operational in each of these years. CBO's cost estimates for the three
additional fiscal years--2012, 2013, and 2014--totaled $3.1 billion.
Thus, the substitution of fiscal years 2012 through 2014 in the latter
estimate for fiscal years 2002 through 2004 in the earlier estimate
amounted to an increase of more than $3 billion and helps to explain,
in part, why the subsequent estimate was greater. Table 2 provides
further information on CBO estimates of CSP costs for various 10-year
periods during fiscal years 2002 through 2016.
Table 2: CBO's CSP Cost Estimates, Fiscal Years 2002 through 2016:
Date of Estimate: May 2002;
Dollars in millions: Estimates by fiscal year: 2002: 0;
Dollars in millions: Estimates by fiscal year: 2003: $3;
Dollars in millions: Estimates by fiscal year: 2004: $19;
Dollars in millions: Estimates by fiscal year: 2005: $55;
Dollars in millions: Estimates by fiscal year: 2006: $110;
Dollars in millions: Estimates by fiscal year: 2007: $182;
Dollars in millions: Estimates by fiscal year: 2008: $267;
Dollars in millions: Estimates by fiscal year: 2009: $361;
Dollars in millions: Estimates by fiscal year: 2010: $459;
Dollars in millions: Estimates by fiscal year: 2011: $544;
Dollars in millions: Estimates by fiscal year: 2012: Dash;
Dollars in millions: Estimates by fiscal year: 2013: Dash;
Dollars in millions: Estimates by fiscal year: 2014: Dash;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: 10-year total: $2,000.
Date of Estimate: January 2003;
Dollars in millions: Estimates by fiscal year: 2002: [A];
Dollars in millions: Estimates by fiscal year: 2003: [A];
Dollars in millions: Estimates by fiscal year: 2004: $73;
Dollars in millions: Estimates by fiscal year: 2005: $177;
Dollars in millions: Estimates by fiscal year: 2006: $319;
Dollars in millions: Estimates by fiscal year: 2007: $493;
Dollars in millions: Estimates by fiscal year: 2008: $687;
Dollars in millions: Estimates by fiscal year: 2009: $877;
Dollars in millions: Estimates by fiscal year: 2010: $1,050;
Dollars in millions: Estimates by fiscal year: 2011: $1,207;
Dollars in millions: Estimates by fiscal year: 2012: $1,378;
Dollars in millions: Estimates by fiscal year: 2013: $1,499;
Dollars in millions: Estimates by fiscal year: 2014: Dash;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: 10-year total: $7,760.
Date of Estimate: March 2004;
Dollars in millions: Estimates by fiscal year: 2002: - Dollars in
millions: Estimates by fiscal year: 2003: [A];
Dollars in millions: Estimates by fiscal year: 2004: [A];
Dollars in millions: Estimates by fiscal year: 2005: $282;
Dollars in millions: Estimates by fiscal year: 2006: $649;
Dollars in millions: Estimates by fiscal year: 2007: $846;
Dollars in millions: Estimates by fiscal year: 2008: $942;
Dollars in millions: Estimates by fiscal year: 2009: $993;
Dollars in millions: Estimates by fiscal year: 2010: $1,018;
Dollars in millions: Estimates by fiscal year: 2011: $1,032;
Dollars in millions: Estimates by fiscal year: 2012: $1,039;
Dollars in millions: Estimates by fiscal year: 2013: $1,045;
Dollars in millions: Estimates by fiscal year: 2014: $1,050;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: 10-year total: $8,896.
Date of Estimate: March 2005[B];
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: Dash;
Dollars in millions: Estimates by fiscal year: 2005: [A];
Dollars in millions: Estimates by fiscal year: 2006: $331;
Dollars in millions: Estimates by fiscal year: 2007: $450;
Dollars in millions: Estimates by fiscal year: 2008: $582;
Dollars in millions: Estimates by fiscal year: 2009: $676;
Dollars in millions: Estimates by fiscal year: 2010: $737;
Dollars in millions: Estimates by fiscal year: 2011: $761;
Dollars in millions: Estimates by fiscal year: 2012: $767;
Dollars in millions: Estimates by fiscal year: 2013: $768;
Dollars in millions: Estimates by fiscal year: 2014: $761;
Dollars in millions: Estimates by fiscal year: 2015: $835;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: 10-year total: $6,668.
Date of Estimate: March: 2006[C];
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: Dash;
Dollars in millions: Estimates by fiscal year: 2005: [A];
Dollars in millions: Estimates by fiscal year: 2006: [A];
Dollars in millions: Estimates by fiscal year: 2007: $373;
Dollars in millions: Estimates by fiscal year: 2008: $446;
Dollars in millions: Estimates by fiscal year: 2009: $436;
Dollars in millions: Estimates by fiscal year: 2010: $440;
Dollars in millions: Estimates by fiscal year: 2011: $579;
Dollars in millions: Estimates by fiscal year: 2012: $685;
Dollars in millions: Estimates by fiscal year: 2013: $763;
Dollars in millions: Estimates by fiscal year: 2014: $794;
Dollars in millions: Estimates by fiscal year: 2015: $875;
Dollars in millions: Estimates by fiscal year: 2016: $1,008;
Dollars in millions: 10-year total: $6,399.
Source: CBO.
Note: Dashes (-) indicate that CBO did not include an estimate for that
fiscal year.
[A] Estimates were provided for these years but were not included in
the table to show only the years included in the 10-year estimate
total.
[B] This is a capped estimate for all years except 2015, based on
legislation capping the program at $6.037 billion over 10 years (fiscal
years 2005 through 2014) to help pay for agricultural disaster
assistance.
[C] This is a capped estimate for all years except 2016 based on the
Deficit Reduction Act of 2005 that established caps on program funding
of $1.954 billion for fiscal years 2006 through 2010 and $5.650 billion
for fiscal years 2006 through 2015.
[End of table]
A similar pattern can be seen with OMB's estimates. OMB's May 2002
estimate, covering the 10-year period fiscal years 2002 through 2011,
included fiscal years 2002, 2003, and 2004, years in which the program
was assumed not to be implemented or only minimally implemented. OMB's
estimate for these 3 fiscal years was $98 million. In contrast, OMB's
January 2004 estimate, covering a later 10-year period, fiscal years
2005 through 2014, included three additional years, fiscal years 2012,
2013, and 2014. OMB's estimate for these years was $4.049 billion.
Thus, the substitution of fiscal years 2012 through 2014 in the latter
estimate for fiscal years 2002 through 2004 in the earlier estimate
amounted to an increase of about $3.95 billion and helps to explain, in
part, why the subsequent estimate was greater. Table 3 provides further
information on OMB estimates of CSP costs for various 10-year periods
during fiscal years 2002 through 2016.
Table 3: OMB's CSP Cost Estimates, Fiscal Years 2002 through 2016:
Dollars in millions.
May 2002;
Dollars in millions: Estimates by fiscal year: 2002: 0;
Dollars in millions: Estimates by fiscal year: 2003: $11;
Dollars in millions: Estimates by fiscal year: 2004: $87;
Dollars in millions: Estimates by fiscal year: 2005: $270;
Dollars in millions: Estimates by fiscal year: 2006: $442;
Dollars in millions: Estimates by fiscal year: 2007: $659;
Dollars in millions: Estimates by fiscal year: 2008: $870;
Dollars in millions: Estimates by fiscal year: 2009: $1,015;
Dollars in millions: Estimates by fiscal year: 2010: $1,183;
Dollars in millions: Estimates by fiscal year: 2011: $1,278;
Dollars in millions: Estimates by fiscal year: 2012: Dash;
Dollars in millions: Estimates by fiscal year: 2013: Dash;
Dollars in millions: Estimates by fiscal year: 2014: Dash;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: Estimates by fiscal year: Dash;
10-year total: $5,858.
March 2003[B];
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: $10;
Dollars in millions: Estimates by fiscal year: 2005: $77;
Dollars in millions: Estimates by fiscal year: 2006: $166;
Dollars in millions: Estimates by fiscal year: 2007: $261;
Dollars in millions: Estimates by fiscal year: 2008: $356;
Dollars in millions: Estimates by fiscal year: 2009: $442;
Dollars in millions: Estimates by fiscal year: 2010: $527;
Dollars in millions: Estimates by fiscal year: 2011: $612;
Dollars in millions: Estimates by fiscal year: 2012: $658;
Dollars in millions: Estimates by fiscal year: 2013: $681;
Dollars in millions: Estimates by fiscal year: 2014: Dash;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: Estimates by fiscal year: Dash;
10-year total: 3,788.
January 2004;
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: [A];
Dollars in millions: Estimates by fiscal year: 2005: $249;
Dollars in millions: Estimates by fiscal year: 2006: $457;
Dollars in millions: Estimates by fiscal year: 2007: $665;
Dollars in millions: Estimates by fiscal year: 2008: $873;
Dollars in millions: Estimates by fiscal year: 2009: $1,046;
Dollars in millions: Estimates by fiscal year: 2010: $1,118;
Dollars in millions: Estimates by fiscal year: 2011: $1,191;
Dollars in millions: Estimates by fiscal year: 2012: $1,264;
Dollars in millions: Estimates by fiscal year: 2013: $1,337;
Dollars in millions: Estimates by fiscal year: 2014: $1,448;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: Estimates by fiscal year: Dash;
10-year total: 9,650.
October 2004[C];
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: Dash;
Dollars in millions: Estimates by fiscal year: 2005: $249;
Dollars in millions: Estimates by fiscal year: 2006: $348;
Dollars in millions: Estimates by fiscal year: 2007: $465;
Dollars in millions: Estimates by fiscal year: 2008: $582;
Dollars in millions: Estimates by fiscal year: 2009: $675;
Dollars in millions: Estimates by fiscal year: 2010: $668;
Dollars in millions: Estimates by fiscal year: 2011: $704;
Dollars in millions: Estimates by fiscal year: 2012: $740;
Dollars in millions: Estimates by fiscal year: 2013: $777;
Dollars in millions: Estimates by fiscal year: 2014: $832;
Dollars in millions: Estimates by fiscal year: 2015: Dash;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: Estimates by fiscal year: Dash;
10-year total: 6,041.
January: 2005[D];
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: Dash;
Dollars in millions: Estimates by fiscal year: 2005: [A];
Dollars in millions: Estimates by fiscal year: 2006: $314;
Dollars in millions: Estimates by fiscal year: 2007: $470;
Dollars in millions: Estimates by fiscal year: 2008: $559;
Dollars in millions: Estimates by fiscal year: 2009: $648;
Dollars in millions: Estimates by fiscal year: 2010: $693;
Dollars in millions: Estimates by fiscal year: 2011: $738;
Dollars in millions: Estimates by fiscal year: 2012: $760;
Dollars in millions: Estimates by fiscal year: 2013: $804;
Dollars in millions: Estimates by fiscal year: 2014: $849;
Dollars in millions: Estimates by fiscal year: 2015: $893;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: Estimates by fiscal year: Dash;
10-year total: 6,728.
January 2006[E];
Dollars in millions: Estimates by fiscal year: 2002: Dash;
Dollars in millions: Estimates by fiscal year: 2003: Dash;
Dollars in millions: Estimates by fiscal year: 2004: Dash;
Dollars in millions: Estimates by fiscal year: 2005: Dash;
Dollars in millions: Estimates by fiscal year: 2006: [A];
Dollars in millions: Estimates by fiscal year: 2007: $342;
Dollars in millions: Estimates by fiscal year: 2008: $396;
Dollars in millions: Estimates by fiscal year: 2009: $456;
Dollars in millions: Estimates by fiscal year: 2010: $500;
Dollars in millions: Estimates by fiscal year: 2011: $640;
Dollars in millions: Estimates by fiscal year: 2012: $723;
Dollars in millions: Estimates by fiscal year: 2013: $719;
Dollars in millions: Estimates by fiscal year: 2014: $783;
Dollars in millions: Estimates by fiscal year: 2015: $831;
Dollars in millions: Estimates by fiscal year: 2016: Dash;
Dollars in millions: Estimates by fiscal year: $831;
10-year total: $6,222.
Source: OMB.
Note: Dashes (-) indicate that OMB did not include an estimate for that
fiscal year.
[A] Estimates were provided for these years but were not included in
the table to show only the years included in the 10-year estimate
total.
[B] This is a capped estimate based on legislation capping the program
at $3.773 billion over 11 years (fiscal years 2003 through 2013) to,
according to OMB, help pay for drought disaster assistance. This cap
was later removed in early 2004.
[C] This is a capped estimate based on legislation capping the program
at $6.037 billion over 10 years (fiscal years 2005 through 2014) to
help pay for agricultural disaster assistance.
[D] This is a capped estimate for all years except fiscal year 2015.
[E] This is a capped estimate for all years except fiscal year 2016
based on the Deficit Reduction Act of 2005 that established caps on
program funding of $1.954 billion for fiscal years 2006 through 2010
and $5.650 billion for fiscal years 2006 through 2015.
[End of table]
USDA Has Authority to Control CSP Costs and Has Established Cost
Control Measures but Needs to Improve Internal Controls and Better
Ensure Consistency in NRCS State Offices' Determinations of Producer
Eligibility:
The farm bill provides USDA general authority to control CSP costs.
While USDA's NRCS has established several cost control measures under
this statutory authority, its efforts to restrict program spending
could be improved by addressing (1) weaknesses in internal controls
used to ensure the accuracy of program payments and (2) inconsistencies
in the wildlife resource criteria used by NRCS state offices to
determine producer eligibility for Tier III, the highest CSP payment
level. Furthermore, because of inconsistencies in wildlife resources
criteria, NRCS cannot ensure that CSP is achieving its intended
wildlife habitat benefits.
The Farm Bill Provides USDA Authority to Control CSP Costs:
The farm bill establishes some eligibility requirements for CSP but
gives USDA the authority to establish additional requirements that
would enable it to control CSP costs, even absent legislative caps on
CSP funding. For example, the farm bill establishes some producer and
land eligibility requirements for CSP but also states that a payment
under CSP "may" be received under three tiers of conservation contracts
and that the Secretary of Agriculture "shall" determine and approve the
minimum eligibility requirements for each tier--giving USDA the
authority to establish additional eligibility requirements that would
enable it to control program participation and, therefore, CSP
costs.[Footnote 40] This provision, for example, gives the Secretary
discretion to establish a tier eligibility requirement that a producer
be located within a specified watershed. The Secretary also must
approve a producer's conservation stewardship plan--as meeting both the
statutory eligibility requirements and any tier requirements--for the
producer to be eligible to participate in CSP.[Footnote 41] In
addition, the Secretary must ensure that the lowest cost conservation
practice alternative is used to fulfill the purposes of the
plan.[Footnote 42] Furthermore, the farm bill sets a payment limit for
each tier level ($20,000 for Tier I; $35,000 for Tier II; and $45,000
for Tier III) but, in stating that payments shall be determined by the
Secretary and shall not exceed such amounts, provides discretion to the
Secretary to further limit the payment amounts.[Footnote 43]
NRCS Established Cost Control Measures in CSP Regulations Designed to
Limit Program Enrollment and Payments:
Under the statutory authority provided by the farm bill, NRCS has
implemented a number of CSP cost control measures to restrain program
spending, primarily by either restricting CSP enrollment or limiting
payments to individual producers. For example, NRCS restricts CSP
participation by limiting program enrollment each year to producers in
specified, priority watersheds. In addition, NRCS limits annual
stewardship payments to 25, 50, and 75 percent of the maximum amount
that the farm bill allows for Tiers I, II, and III, respectively. Key
cost control measures--found either in the farm bill, in CSP
regulations, or in the program sign-up notice--in place for the fiscal
year 2005 CSP sign-up are described in table 4.
Table 4: Key Farm Bill and Regulatory Cost Control Measures Used in the
Fiscal Year 2005 CSP Sign-up:
Cost control measures: Program enrollment limited to specified
watersheds;
Farm bill: No specific language to restrict enrollment based on
location. However, the Secretary of Agriculture shall determine and
approve the minimum eligibility requirements for each tier;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: One of the
eligibility requirements is that a majority of the agricultural
operation must be within a watershed selected for sign-up. According to
NRCS, limiting enrollment each year to priority watersheds enables NRCS
to adjust the potential scope of the program in accordance with the
available funding. In addition, according to NRCS, this approach
constrains technical assistance costs associated with processing CSP
applications by limiting the number of applications.
Cost control measures: Sign-ups are periodic, not continuous;
Farm bill: No specific language regarding when sign-ups should occur;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: CSP
enrollment is restricted to specified sign-up periods. For example, the
fiscal year 2005 sign-up period ran from March 28, 2005, through May
27, 2005.
Cost control measures: Minimum conservation treatment requirements for
eligibility;
Farm bill: Tier I: An applicant must--in a plan of conservation
practices--(1) address at least one significant resource of concern for
the enrolled portion of the agricultural operation at a level that
meets the appropriate nondegradation standard and (2) cover active
management of conservation practices that are implemented or maintained
under the conservation security contract.[A].
Tier II: An applicant must--in a plan of conservation practices--(1)
address at least one significant resource of concern for the entire
agricultural operation at a level that meets the appropriate
nondegradation standard and (2) cover active management of conservation
practices that are implemented or maintained under the conservation
security contract.
Tier III: An applicant must--in a plan of conservation practices--(1)
apply a resource management system that meets the appropriate
nondegradation standard for all resources of concern for the entire
agricultural operation and (2) cover active management of conservation
practices that are implemented or maintained under the conservation
security contract.[C];
NRCS's CSP regulations and fiscal year 2005 sign-up notice: Tier I: An
applicant must have addressed both soil and water (i.e., two) resource
concerns on at least part of the operation to a specified minimum level
of treatment.[B].
Tier II: An applicant must have addressed both soil and water (i.e.,
two) resource concerns on the entire operation to a specified minimum
level of treatment. In addition, the applicant must agree to address an
additional resource concern by the end of the contract period.
Tier III: An applicant must have addressed all applicable resource
concerns on the entire operation to a specified minimum level of
treatment.[D].
Cost control measures: Prioritization of eligible applications for
funding;
Farm bill: No specific language to prioritize eligible applications.
However, the Secretary of Agriculture shall determine and approve the
minimum eligibility requirements for each tier.[E];
NRCS's CSP regulations and fiscal year 2005 sign-up notice: New program
enrollments may be limited in any fiscal year to enrollment categories
designed to focus on priority conservation concerns and enhancement
measures. For the fiscal year 2005 sign-up, NRCS placed all eligible
applications into five enrollment categories that prioritized
applications for funding. Beginning with the highest enrollment
category, NRCS accepted applications until the available funding was
exhausted.[F].
Cost control measures: Requirement for documentation of existing
conservation treatment;
Farm bill: No specific language to require documentation of existing
conservation treatment. However, the Secretary of Agriculture shall
determine and approve the minimum eligibility requirements for each
tier;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: An
applicant must provide NRCS with documentation that includes
information on existing conservation practices, treatment, and
activities on the applicant's operation. NRCS used this information to
determine if the application met the minimum eligibility requirements
and, if so, to place the application in an enrollment category.
Cost control measures: Limits on total CSP contract payments;
Farm bill: Annual contract payments to an individual or entity shall
not exceed $20,000 for Tier I;
$35,000 for Tier II;
and $45,000 for Tier III;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: The payment
limits per contract were not changed. A CSP applicant may submit only
one application per sign-up period and have only one active contract at
any time.
Cost control measures: Limits on stewardship (base) payments;
Farm bill: Annual stewardship payments are limited to $5,000 for Tier
I, $10,500 for Tier II, and $13,500 for Tier III. For a given contract,
the stewardship payment is based on (1) the average national per-acre
rental rate for a specific land use during the 2001 crop year or
another appropriate rate for the 2001 crop year that ensures regional
equity and (2) a tier-specific percentage (i.e., 5 percent for Tier I;
10 percent for Tier II;
and 15 percent for Tier III);
NRCS's CSP regulations and fiscal year 2005 sign-up notice: Further
reduces the stewardship payment to a percentage of the amount
calculated under the farm bill formula (i.e., 25 percent for Tier I, 50
percent for Tier II, and 75 percent for Tier III).
Cost control measures: Limits on existing conservation practice
(maintenance) payments;
Farm bill: Payments to maintain existing conservation practices are
limited to 75 percent of the average county costs of the practices for
the 2001 crop year. For a beginning producer, this limit is 90 percent;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: Existing
practice payments may be limited for any given sign-up. For the 2005
sign-up, existing practice payments were set at 25 percent of the
stewardship payment.[G].
Cost control measures: Limits on new conservation practice;
payments;
Farm bill: New practice payments are limited to 75 percent of the cost
of the average county costs of the practices for the 2001 crop year.
For a beginning producer, this limit is 90 percent;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: New
practice payments were limited to 50 percent of the cost of adopting
the practice during the 2001 crop year. For a beginning producer, this
limit was 65 percent. In addition, new practice payments were limited
to a total of $10,000 over the life of a CSP contract. Furthermore,
within each watershed, only designated conservation practices were
eligible for new practice payments.
Cost control measures: Limits on enhancement payments;
Farm bill: No specific language to limit enhancement payments;
NRCS's CSP regulations and fiscal year 2005 sign-up notice: An
enhancement payment limit or variable rate may be set for any given
sign-up. For the 2005 sign-up, annual enhancement payments were limited
to $13,750 for Tier I contracts;
$21,875 for Tier II contracts;
and $28,125 for Tier III contracts.
Sources: GAO analysis of the farm bill and NRCS's amended interim final
CSP rule, 70 Fed. Reg. 15212 (Mar. 25, 2005) (7 C.F.R. pt. 1469) and
2005 sign-up notice, 70 Fed. Reg. 15277 (Mar. 25, 2005).
[A] The nondegradation standard is defined as the level of measures
required to adequately protect and prevent degradation of one or more
natural resources as determined by NRCS in accordance with the quality
criteria described in its handbooks.
[B] For Tiers I and II, the minimum level of treatment for soil quality
on cropland is considered achieved when the soil conditioning index is
positive. For Tiers I and II, the minimum level of treatment for water
quality on cropland is considered achieved if the current level of
treatment meets or exceeds NRCS's quality criteria for the specific
resource concerns of nutrients, pesticides, sediment, and salinity for
surface water and nutrients, pesticides, and salinity for groundwater.
For Tiers I and II, the minimum level of treatment on pastureland and
rangeland is vegetation and animal management accomplished by following
a grazing management plan that provides for (1) a forage-animal
balance, (2) proper livestock distribution, (3) timing of use, and (4)
managing livestock access to water courses. To determine that resource
concerns were managed at specified minimum levels of conservation
treatment, NRCS field office staff reviewed information provided by the
applicant and verified the accuracy of this information through
interviewing the applicant and, in some cases, performing field checks.
[C] A resource management system is a system of conservation practices
and management relating to land or water use that is designed to
prevent resource degradation and permit sustained use of land, water,
and other resources, as defined in accordance with the NRCS technical
guide.
[D] The minimum level of treatment for Tier III is having a fully
implemented resource management system that meets the quality criteria
for the local NRCS field office technical guide for all applicable
resource concerns and considerations with the following exceptions: (1)
the minimum requirement for soil quality on cropland is considered
achieved when the soil conditioning index is positive, (2) the minimum
requirement for water quantity and irrigation water management on
cropland or pastureland is considered achieved when the current level
of management for the system results in a water use index value of at
least 50, and (3) the minimum requirement for wildlife is considered
achieved when the current level of treatment and management for the
system results in an index value of at least 0.5 using a general or
species specific habitat assessment guide. In addition, for Tier III,
all riparian corridors, including streams and natural drainages, within
the agricultural operation must be buffered to restore, protect, or
enhance riparian resources. As appropriate, riparian corridors must be
managed or designed to intercept sediment, nutrients, pesticides, and
other materials in surface runoff; reduce nutrients and other
pollutants in shallow subsurface water flow; lower water temperature;
and provide litter fall or structural components for habitat complexity
or to slow out-of-bank floods.
[E] The farm bill provides that "[i]n entering into conservation
security contracts with producers—the Secretary shall not use
competitive bidding or any similar procedure." Some stakeholders view
NRCS's use of enrollment categories as being inconsistent with this
statutory language. However, NRCS has stated that it is not
implementing a competitive process but is merely implementing the
statutory scheme of providing payments for those applicants meeting
specified criteria, so as to stay within the budgetary and technical
assistance limits.
[F] Placement of applications into the five enrollment categories was
based on the conservation treatment in place for at least 2 years, as
well as soil conditioning index levels. If all the applications in an
enrollment category could not be funded, the applications were funded
based on subcategories. In the fiscal year 2005 sign-up, placement in
these subcategories was based on various factors such as whether the
applicant was a limited resource producer.
[G] According to an NRCS official, NRCS generally lacks data on the
cost of maintaining conservation practices in the 2001 crop year. As a
result, NRCS calculates existing practice payments based on 25 percent
of the stewardship payment amount. According to another NRCS official,
this alternative results in lower payments. In addition, NRCS
stipulates in its regulation that existing practice payments may be
based on a percentage of the stewardship payment if this payment does
not exceed 75 percent of the average 2001 county cost of installing the
conservation practice.
[End of table]
Some Fiscal Year 2004 CSP Contract Payments Exceeded Farm Bill Payment
Limits:
Some fiscal year 2004 CSP contract payments exceeded applicable payment
limits established in the farm bill. As discussed, the farm bill
limited annual contract payments to an individual or entity to $20,000
for Tier I; $35,000 for Tier II; and $45,000 for Tier III. However, we
found that 409 (19 percent) of the 2,180 fiscal year 2004 CSP contract
payments exceeded these limits. Specifically, 95 (12 percent) of Tier I
payments exceeded $20,000; 209 (24 percent) of Tier II payments
exceeded $35,000; and 105 (21 percent) of Tier III payments exceeded
$45,000. (Tables 12, 13, and 14 in app. II show the distribution of
fiscal year 2004 contract payments for Tiers I, II, and III,
respectively.)
According to NRCS officials, these contract payments exceeded the
statutory limits because they included an "advance" enhancement payment
component. These officials noted that NRCS did not intend for this
advance component to be included in the annual contract payment limit
because it was a one-time payment. Furthermore, they said that any
producer who received an advance enhancement payment would have that
payment (generally limited to $10,000) offset through deductions over
the remaining years of that producer's CSP contract. For example, for a
producer whose contract had 9 remaining years, NRCS would deduct one-
ninth of the advance enhancement payment in each of these years. Thus,
over the life of a contract, no producer would receive more than the
maximum total possible payment (e.g., $450,000 over 10 years for a Tier
III contract). NRCS officials explained that for the fiscal year 2004
CSP sign-up, NRCS, using its borrowing authority, obtained the maximum
amount of funding available, or $41.443 million. However, because of
lower than anticipated producer participation in CSP that year, NRCS
did not need all of this money to make annual contract payments to
producers. NRCS decided to use the remaining amounts--about $13.6
million--to make a one-time advance enhancement payment to most (2,070
of 2,180) of the producers enrolled in CSP that year.[Footnote 44] In
addition, according to NRCS officials, in subsequent years, the
offsetting deductions made for these fiscal year 2004 advance
enhancement payments would result in more funding being available for
new CSP contracts.
We plan to pursue with USDA's Office of General Counsel the
availability of remaining CSP funds for advance enhancement payments
that, when included with annual contract payments, exceed the statutory
payment limits.
Although NRCS Has Established Internal Controls, Weaknesses in These
Controls Increase the Risk of Improper Payments:
In addition to the cost control measures in the farm bill and CSP
regulations, USDA and NRCS have established internal controls that help
to ensure the accuracy and appropriateness of payments made through
agricultural conservation programs, including CSP. These controls, also
referred to as management controls, include the organizational policies
and procedures used to reasonably ensure that (1) programs achieve
their intended results; (2) resources are used consistent with agency
and departmental missions; (3) programs and resources are protected
from waste, fraud, and mismanagement; (4) laws and regulations are
followed; and (5) reliable and timely information is obtained,
maintained, reported, and used for decision-making.[Footnote 45] (More
specific information on USDA and NRCS internal controls is presented in
app. VII.) However, recent reviews of these internal controls done by
NRCS's Oversight and Evaluation (O&E) Staff and the USDA Inspector
General raise concerns regarding the adequacy of some of these controls
to preclude improper payments being made under CSP.
Although NRCS has established internal control guidance for CSP,
implementation of these controls has sometimes been criticized. For
example, in reviews it conducted in 2005, NRCS's O&E staff found
problems with several aspects of the agency's implementation of CSP,
including its implementation of some internal controls. (We examined
draft reports related to these reviews in January 2006; NRCS considers
the information contained in these drafts to be predecisional and
subject to change pending management review and the agency's
preparation of management action plans describing its response to the
reports' recommendations.) In assessing internal controls, the O&E
staff conducted work at NRCS field offices located in 18 watersheds (in
13 states) that were eligible for either the fiscal year 2004 or fiscal
year 2005 CSP sign-up. Among other things, the staff found weaknesses
in quality assurance and case file documentation. For example, the
staff found that 12 of 13 NRCS state-level Quality Assurance Plans
reviewed did not include specific CSP components such as those related
to conservation planning and application, that NRCS's Conservation
Programs Manual (sec. 518.75 (b)) states must be included. In addition,
the staff found that 33 of 55 fiscal year 2004 CSP contracts studied
had not had a contract review. The Conservation Programs Manual (sec.
518.101) provides that "the designated [NRCS] conservationist will
review the contract annually and document that the provisions of the
contract are followed." According to the O&E staff, the absence of a
contract review could result in payments being made for enhancements
that are not being done or not yet completed as scheduled in the
producer's conservation security plan.
Regarding case file documentation, the O&E staff found that many
conservation stewardship plans were missing components. For example,
most plans included components such as maps and map attribute
information, but information needed to evaluate the effectiveness of a
plan in achieving its environmental objectives was either missing or
incomplete in up to 60 percent of the plans. The preparation of
conservation stewardship plans is required by the farm bill and,
according to the Conservation Programs Manual (sec. 518.70), this plan
"is the basis for a conservation stewardship contract." In general, a
plan identifies the objectives for the associated contract, the time
frames for implementing new practices, enhancements that will impact
payment levels over the life of the contract, and additional measures
needed to move to a higher tier level. In light of these findings, O&E
staff offered several tentative recommendations related to revising
NRCS's written guidance documents, developing a checklist for staff to
use in compiling conservation stewardship plans, improving management
oversight, and providing staff further training.
In addition, other aspects of NRCS's internal controls have been
criticized. For example, in January 2005, the USDA Inspector General
reported that (1) NRCS had neither identified the internal control
measures in place to preclude, or detect in a timely manner, improper
payments for the programs it administers, including CSP, nor did it
know if the controls were in operation and (2) NRCS had not conducted
risk assessments of potential improper payments for these programs. In
addition, USDA reported several material weaknesses to its financial
and accounting systems and information security program in its fiscal
year 2005 Performance and Accountability Report. See appendix VII for
further discussion of these matters.
In its planning documents, NRCS notes that the nation made a massive
financial commitment to conservation in the 2002 farm bill and thus
NRCS must manage the taxpayers' money well, including documenting how
these funds have been spent. Among other things, the agency said it
would develop processes to better record obligations and improve the
accuracy and timeliness of its financial information. However, until
actions are completed to correct these internal control problems, NRCS
cannot be certain that contract payments information for CSP and other
programs is accurate. This increases the potential for improper
payments being made under these programs.
Inconsistencies in State Office Determinations of Producer Eligibility
for CSP Payments May Undermine NRCS Cost Controls and the Achievement
of CSP's Intended Wildlife Habitat Benefits:
NRCS's efforts to control program spending may be weakened by
inconsistencies in NRCS state offices' determinations of producer
eligibility for the three CSP payment tiers. Several NRCS state
officials expressed concerns about such inconsistencies, suggesting
that some state offices may have been more lenient than their own state
in determining producers' eligibility for CSP payments. In particular,
several NRCS state officials had specific concerns about
inconsistencies in the wildlife habitat assessment criteria that NRCS
state offices use, in part, to determine applicant eligibility for Tier
III, the highest CSP payment level.[Footnote 46] The farm bill requires
a producer to meet minimum standards for all applicable resource
concerns on the entire agricultural operation, which would include
wildlife habitat, to be eligible for Tier III payments.[Footnote 47]
For the fiscal year 2004 CSP sign-up, NRCS provided limited guidance to
its state offices that were responsible for developing the assessment
criteria that were used to determine whether a producer met minimum
standards for protecting wildlife habitat. However, a post-sign-up
debriefing of NRCS headquarters and state officials to identify lessons
learned indicated that the state offices developed assessment criteria
that were extremely variable, contributing to significant differences
in the rate of CSP participation and payments at the Tier III level
among the various watersheds included in the sign-up.[Footnote 48]
According to documentation based on this debriefing, this variability
in assessment criteria was attributed to (1) differences in the type of
assessment criteria used (i.e., some states used targeted species
assessment criteria while others used general wildlife assessment
criteria) and (2) differences among the states' general wildlife
assessment criteria. Table 5 shows the Tier III participation and
payment rates for each of these watersheds.
Table 5: Tier III Contracts and Payments by Watershed, Fiscal Year
2004:
Watershed/lead NRCS state office: Auglaize, Ohio;
Tier III contracts: 66;
Total contracts: 189;
Percentage of Contracts in Tier III: 35%;
Tier III Contract Payments: $982,117;
Total payments: $2,831,953;
Percentage of total payments for Tier III contracts: 35%.
Watershed/lead NRCS state office: Blue Earth Minnesota;
Tier III contracts: 9;
Total contracts: 280;
Percentage of Contracts in Tier III: 3;
Tier III Contract Payments: $183,424;
Total payments: 3,242,507;
Percentage of total payments for Tier III contracts: 6.
Watershed/lead NRCS state office: East Nishnabotna;
Iowa;
Tier III contracts: 8;
Total contracts: 145;
Percentage of Contracts in Tier III: 6;
Tier III Contract Payments: $86,356;
Total payments: 1,129,248;
Percentage of total payments for Tier III contracts: 8.
Watershed/lead NRCS state office: Hondo;
Texas;
Tier III contracts: 8;
Total contracts: 16;
Percentage of Contracts in Tier III: 50;
Tier III Contract Payments: $61,205;
Total payments: 71,766;
Percentage of total payments for Tier III contracts: 85.
Watershed/lead NRCS state office: Kishwaukee;
Illinois;
Tier III contracts: 16;
Total contracts: 191;
Percentage of Contracts in Tier III: 8;
Tier III Contract Payments: $304,386;
Total payments: 4,828,559;
Percentage of total payments for Tier III contracts: 6.
Watershed/lead NRCS state office: Lemhi;
Idaho;
Tier III contracts: 10;
Total contracts: 18;
Percentage of Contracts in Tier III: 56;
Tier III Contract Payments: $289,917;
Total payments: 379,555;
Percentage of total payments for Tier III contracts: 76.
Watershed/lead NRCS state office: Little;
Georgia;
Tier III contracts: 0;
Total contracts: 37;
Percentage of Contracts in Tier III: 0;
Tier III Contract Payments: $0;
Total payments: 949,539;
Percentage of total payments for Tier III contracts: 0.
Watershed/lead NRCS state office: Little River Ditches;
Missouri;
Tier III contracts: 12;
Total contracts: 189;
Percentage of Contracts in Tier III: 6;
Tier III Contract Payments: $311,548;
Total payments: 4,424,805;
Percentage of total payments for Tier III contracts: 7.
Watershed/lead NRCS state office: Lower Chippewa;
Wisconsin;
Tier III contracts: 50;
Total contracts: 207;
Percentage of Contracts in Tier III: 24;
Tier III Contract Payments: $836,637;
Total payments: 2,056,147;
Percentage of total payments for Tier III contracts: 41.
Watershed/lead NRCS state office: Lower Little Blue;
Kansas;
Tier III contracts: 18;
Total contracts: 143;
Percentage of Contracts in Tier III: 13;
Tier III Contract Payments: $342,893;
Total payments: 1,204,849;
Percentage of total payments for Tier III contracts: 28.
Watershed/lead NRCS state office: Lower Salt Fork Arkansas;
Oklahoma;
Tier III contracts: 57;
Total contracts: 176;
Percentage of Contracts in Tier III: 32;
Tier III Contract Payments: $552,618;
Total payments: 1,305,590;
Percentage of total payments for Tier III contracts: 42.
Watershed/lead NRCS state office: Lower Yellowstone;
Montana;
Tier III contracts: 13;
Total contracts: 49;
Percentage of Contracts in Tier III: 27;
Tier III Contract Payments: $327,821;
Total payments: 874,217;
Percentage of total payments for Tier III contracts: 37.
Watershed/lead NRCS state office: Moses Coulee;
Washington;
Tier III contracts: 4;
Total contracts: 43;
Percentage of Contracts in Tier III: 9;
Tier III Contract Payments: $92,563;
Total payments: 826,985;
Percentage of total payments for Tier III contracts: 11.
Watershed/lead NRCS state office: Punta de Agua;
New Mexico;
Tier III contracts: 15;
Total contracts: 19;
Percentage of Contracts in Tier III: 79;
Tier III Contract Payments: $584,594;
Total payments: 626,491;
Percentage of total payments for Tier III contracts: 93.
Watershed/lead NRCS state office: Raystown;
Pennsylvania;
Tier III contracts: 14;
Total contracts: 36;
Percentage of Contracts in Tier III: 39;
Tier III Contract Payments: $82,556;
Total payments: 145,831;
Percentage of total payments for Tier III contracts: 57.
Watershed/lead NRCS state office: Saluda;
South Carolina;
Tier III contracts: 1;
Total contracts: 76;
Percentage of Contracts in Tier III: 1;
Tier III Contract Payments: $272;
Total payments: 138,619;
Percentage of total payments for Tier III contracts: < 1.
Watershed/lead NRCS state office: St. Joseph;
Indiana;
Tier III contracts: 125;
Total contracts: 217;
Percentage of Contracts in Tier III: 58;
Tier III Contract Payments: $3,122,554;
Total payments: 4,183,158;
Percentage of total payments for Tier III contracts: 75.
Watershed/lead NRCS state office: Umatilla;
Oregon;
Tier III contracts: 83;
Total contracts: 149;
Percentage of Contracts in Tier III: 56;
Tier III Contract Payments: $3,860,988;
Total payments: 5,237,575;
Percentage of total payments for Tier III contracts: 74.
Watershed/lead NRCS state office: Total;
Tier III contracts: 509;
Total contracts: 2,180;
Percentage of Contracts in Tier III: 23%;
Tier III Contract Payments: $12,022,446;
Total payments: $34,457,394;
Percentage of total payments for Tier III contracts: 35%.
Source: GAO analysis of NRCS data (as of July 27, 2005).
[End of table]
As shown in the table, the percentage of total contracts in Tier III
varied from a low of 0 in one watershed to a high of 79 percent in
another watershed. Part of this variation may be attributed to
differences in land uses among watersheds. For example, land that is in
an intensive agricultural use, such as cropland, tends to be less
suitable as wildlife habitat than land that is not used intensively
such as rangeland. However, even among watersheds in which CSP
enrollments were over 90 percent cropland--Auglaize, Blue Earth, East
Nishnabotna, Kishwaukee, Little, Little River Ditches, Lower Chippewa,
Raystown, and St. Joseph--the percentage of total contracts in Tier III
varied from 0 to 58 percent, and the percentage of payments going to
Tier III contracts ranged from 0 to 75 percent.
In response to the variation in wildlife habitat assessment criteria
used during the fiscal year 2004 sign-up and related differences in
Tier III participation, NRCS's Wildlife Team, responsible for technical
matters concerning wildlife habitat under CSP, developed national
guidance that NRCS state offices were to follow in creating their
criteria for subsequent sign-ups. The national guidance was provided to
state office staff during training sessions held before the fiscal year
2005 CSP sign-up.
The Wildlife Team developed the national guidance based on NRCS's CSP
regulations that state that the minimum requirement for wildlife
habitat is considered achieved when a producer's level of treatment and
management results in an index value of at least 0.5 based on a general
or species-specific habitat assessment guide. A Wildlife Team official
said this 0.5 index value corresponds to 50 percent of the potential
habitat for a given land area[Footnote 49] and stated that the national
guidance was developed accordingly. He noted that, because habitat
needs differ across the nation, it is not possible to develop one set
of criteria that would work for the whole country and apply to all
situations. Because of these differences, the national guidance
instructs each state to define its own minimum criteria for each of the
listed wildlife resource components in the national guidance based upon
the state's own unique set of conditions.[Footnote 50] For example, for
rangeland, the national guidance identifies vegetative height
management during nesting season as a component that must be addressed
and instructs state offices to define the minimum foliage height of
grasses. Despite this flexibility, the official said that the purpose
of this national guidance was to avoid the wide variations in criteria
that led to large discrepancies and inconsistencies in the fiscal year
2004 sign-up.
According to the national guidance, NRCS state offices' general
wildlife habitat assessment criteria for cropland must address the
following six wildlife resource components:[Footnote 51]
* Amount of noncrop vegetative cover. These areas include woodlots,
windbreaks, field corners, hedgerows, grassed areas, wetlands, or
riparian areas managed for wildlife. According to the guidance, state
offices must define a minimum percentage of noncrop vegetative cover
within or adjacent to offered cropland fields.[Footnote 52] A state
office's criteria for this component must be met for each cropland
field.[Footnote 53]
* Size of noncrop vegetative cover. State offices must define a minimum
dimension for these areas. According to a Wildlife Team official, an
example is a minimum width.
* Interspersion of noncrop vegetative cover.[Footnote 54] State offices
must define a minimum distance from all parts of cropland fields to
noncrop vegetative cover.
* Condition of noncrop vegetative cover. Minimum standards for the
composition and structure of the noncrop vegetative cover must be
defined. Examples include minimum plant heights and restrictions on
mowing.
* Conditions for lakes, ponds, wetlands, and streams. Minimum
conditions, such as buffer widths, must be defined:
* Crop residue management. Minimum levels of crop residue must be
defined.[Footnote 55]
According to Wildlife Team officials, the national guidance instructed
each NRCS state office to develop wildlife habitat assessment criteria
that consisted of questions corresponding to the wildlife resource
components in the national guidance. For each component of the national
guidance, these officials said these questions were to include specific
criteria established by the state offices and were intended to
determine if a CSP applicant was meeting these criteria and thus was
addressing the wildlife habitat resource concern. In general, the
phrasing and number of questions that state offices included in these
assessment criteria, as well as the overall design of the assessment
criteria, varied. For example, one state office's assessment criteria
had nine questions and required a "yes" response to each question.
Another state office's assessment criteria included six questions and
required a "yes" response to each question.
In reviewing the wildlife habitat assessment criteria that NRCS state
offices used in the fiscal year 2005 sign-up, we found that some NRCS
state offices used criteria that were inconsistent with the national
guidance. For example, the design of the assessment criteria used for
cropland in three states made it possible for NRCS to determine that a
producer was addressing the wildlife habitat resource concern even
though that producer may not have met the state criteria for each of
the six resource components identified in the national guidance.
Although these three state offices' wildlife habitat assessment
criteria included a question or questions that generally related to
each of the national guidance's components, the state offices required
"yes" responses to only five of the seven questions listed in the
assessment criteria. Thus, in effect, these states did not require
producer compliance with all aspects of their state criteria or, by
extension, all six components of the national guidance. A Wildlife Team
official explained that although NRCS has not undertaken a review to
determine whether producers have qualified for Tier III payments under
this scenario, based on informal discussions with field office staff,
this official concluded that some producers received such payments
during the fiscal years 2004 and 2005 sign-ups.[Footnote 56] In
addition, another Wildlife Team official said it was particularly
problematic that a producer could receive a Tier III payment in these
states without meeting the state criteria related to the amount of
noncrop vegetative cover.[Footnote 57] According to this official, this
component of the national guidance is particularly important for
cropland because it is intensively farmed and generally unsuitable for
wildlife habitat. Thus, the creation or preservation of areas of
noncrop vegetative cover associated with cropland is critical to
providing adequate wildlife habitat.
As a result of these inconsistencies with the national guidance,
producers in these states could qualify for Tier III payments even
though they might not be providing habitat as intended by the national
guidance and might not have qualified for Tier III payments in another
state that used criteria that more closely followed the national
guidance. In addition, the use of criteria that are inconsistent with
the national guidance reduces NRCS's ability to ensure that CSP is
achieving its intended wildlife habitat benefits. If producers are not
providing the wildlife habitat benefits intended by the national
guidance, the environmental benefit achieved per dollar of CSP spending
may be reduced,[Footnote 58] and CSP cost control measures would be
weakened. Furthermore, some NRCS state officials said such variability
in state assessment criteria could lead to pressures for more lenient
payment eligibility determinations within their own states. According
to these officials, when producers in a state that is conforming to the
national wildlife habitat guidance see that other states are using more
lenient criteria, they may pressure their NRCS state office to adopt
more lenient criteria as well.
NRCS Wildlife Team officials agreed with our assessment that some NRCS
state offices used wildlife habitat assessment criteria for the fiscal
year 2005 sign-up that were not consistent with the national guidance.
In addition, these officials said that NRCS should conduct field tests
of states' criteria to ensure that these criteria are consistent with
the national guidance and to determine the extent to which Tier III
contracts provide adequate wildlife habitat benefits. However, they
cited time constraints as the primary reason that states' criteria have
not been field tested and they indicated, as of February 2006, that
NRCS does not have plans to do this testing. Regarding reasons why some
state offices have not developed criteria consistent with the national
guidance, these officials noted that some state office officials hold
the view that CSP is a working lands program and, therefore, should not
place too much emphasis on wildlife habitat or force a producer to take
land out of production in order to create the habitat needed to qualify
for a Tier III payment. Some of the state officials we contacted
corroborated this point. In addition, the Wildlife Team officials noted
that some state office officials might not have understood what
guidance they were supposed to follow during the fiscal year 2005 sign-
up because NRCS's Conservation Programs Manual--the principal source of
guidance for NRCS field office staff for implementing conservation
programs--had no explicit reference to the national guidance.
Accordingly, the Wildlife Team officials said they had recommended to
NRCS's programs office that a reference to the national guidance be
included in the manual. They opined that inclusion of this reference
would emphasize the importance of the national guidance to the agency's
field staff.
Finally, some NRCS state officials also expressed concerns about other
inconsistencies among state offices in determining producer eligibility
for certain CSP payments. In particular, they cited inconsistencies in
states' determinations that producers are sufficiently addressing water
quality issues. According to NRCS officials, the agency has been aware
of this issue since the fiscal year 2004 sign-up when it relied on
state-based standards to determine if CSP applicants were meeting
eligibility requirements for water quality concerns. In the 2005 sign-
up, to increase consistency, NRCS required its state offices to develop
water quality checklists based on national criteria to assess applicant
eligibility regarding water quality issues. These checklists were to
address all critical water quality concerns, including those related to
nutrients, pesticides, and sediment. In the 2006 sign-up, to further
increase consistency, NRCS developed a national water quality
eligibility "tool" that uses indices and scales to achieve an overall
water quality assessment rating for each applicant. Using the tool,
NRCS assigns points for an applicant's current conservation activities
and the level of water quality protection those activities provide.
Despite Legislative and Regulatory Measures That Lessen Possible
Duplication between CSP and Other Programs, the Potential for Duplicate
Payments Still Exists, and Such Payments Have Occurred:
The farm bill and CSP regulations include various measures that reduce
the potential for duplication between CSP and other USDA conservation
programs. For example, as authorized in the statute, CSP can reward
producers for conservation actions that they have already taken,
whereas other programs generally provide assistance to producers to
encourage them to take new actions intended to address conservation
problems on working lands or to idle or retire environmentally
sensitive land from production. In addition, USDA regulations establish
higher minimum eligibility standards for CSP than exist for other
programs, helping to differentiate the applicant pool for CSP from
these programs. However, the possibility remains that producers could
receive duplicate payments for the same conservation action from CSP
and other programs, and such duplication has occurred. In addition,
NRCS does not have a comprehensive process to preclude or identify such
duplicate payments.
Farm Bill Provisions Lessen the Potential for Duplication:
CSP operates under a number of statutory provisions that distinguish it
from other USDA conservation programs and make duplicate payments less
likely. Specifically, the farm bill:
* explicitly prohibits duplicate payments under CSP and other
conservation programs for the same practices on the same land.
* provides incentives to producers, through CSP's Tier III payments, to
address all applicable resource concerns on entire agricultural
operations (i.e., whole-farm planning).
* provides that CSP may reward producers for maintaining conservation
practices that they have already undertaken, whereas other programs
generally provide assistance to encourage producers to take new actions
to address conservation problems on working lands or to idle or retire
environmentally sensitive land from agricultural production.
* establishes several types of CSP payments--stewardship, existing
practice, and enhancement payments--that are unique to CSP and not
offered under other programs.[Footnote 59]
In addition, other farm bill provisions reduce potential duplication by
prohibiting certain payments from being made through CSP.[Footnote 60]
For example, CSP payments cannot be made for:
* construction or maintenance of animal waste storage or treatment
facilities or associated waste transport or transfer devices for animal
feeding operations.[Footnote 61]
* conservation activities on lands enrolled in the Conservation Reserve
Program, the Wetlands Reserve Program, and the Grassland Reserve
Program.
Furthermore, if a producer receives payments under another program--
such as a commodity price support program--that are contingent on the
producer's compliance with requirements for the protection of highly
erodible land and wetlands, the farm bill only authorizes a CSP payment
on that land for practices that exceed those requirements.[Footnote 62]
NRCS Regulatory Measures and Procedures Further Distinguish CSP from
Other Programs:
In addition to farm bill provisions that reduce potential duplication,
a number of NRCS regulatory measures and procedures further distinguish
CSP from other USDA conservation programs. These include the following:
* NRCS's CSP regulations and Conservation Programs Manual elaborate on
statutory provisions that prevent producers from receiving payments
under CSP for the same practice on the same land. For example, the
manual states that a CSP participant may not receive CSP cost-share
funding for new conservation practices that were applied with financial
assistance from other USDA conservation programs. In addition, the
manual states that a participant may not receive a CSP payment for
enhancement activities if the participant is also earning financial
assistance payments through other programs for the same conservation
practice or action on the same land during the same year.
* CSP regulations establish higher minimum eligibility standards for
CSP than exist for other programs, helping to differentiate the
applicant pool for CSP from the potential applicants for other
programs. For example, to be eligible for a Tier I CSP contract, a
producer must already have addressed water and soil quality to a
minimum level of treatment. NRCS encourages producers who do not meet
these higher standards to apply for assistance under other programs.
* For the 2005 sign-up, NRCS limited CSP cost-share payments for new
conservation practices to 50 percent (65 percent for beginning and
limited-resource producers) of implementation costs. NRCS allows cost-
share payments of up to 75 percent under the Environmental Quality
Incentives Program (EQIP) and the Wildlife Habitat Incentives Program
(WHIP).[Footnote 63] Thus, producers have a stronger financial
incentive to apply for new conservation practice payments through EQIP
or WHIP rather than CSP. In addition, NRCS has limited the number of
conservation practices that are eligible for funding through CSP. In
any given watershed, CSP payments for new conservation practices were
only offered for up to about 20 of the approximately 200 conservation
practices that can be funded through EQIP.
* NRCS has encouraged enhancement payments for conservation actions
that exceed the minimum treatment standards required for CSP
eligibility. According to NRCS officials, emphasizing enhancements
helps to differentiate CSP from other programs, such as EQIP and WHIP,
which do not offer similar payments. As discussed, EQIP and WHIP
payments generally assist producers in achieving a level of treatment
that meets the minimum or nondegradation standard for a conservation
activity,[Footnote 64] as defined by NRCS, which generally is less than
the minimum treatment standard for CSP enhancements. Most CSP payments
made in fiscal years 2004 and 2005 were for enhancements. In fiscal
year 2004, enhancement payments and advance enhancement payments
accounted for about 81 percent of total CSP payments.[Footnote 65] In
fiscal year 2005, enhancement payments were 81 percent of total CSP
payments.
* CSP regulations and procedures also provide financial incentives for
enhancements. Specifically, in order to receive a larger payment up to
the full total payment allowed under each enrollment tier, a producer
must agree to implement enhancements because of the limits on
stewardship, existing practice, and new practice payments. Stewardship
payments are capped under the farm bill and CSP regulations at $5,000
for Tier I, $10,500 for Tier II, and $13,500 for Tier III.[Footnote 66]
Furthermore, CSP sign-up notices have limited existing practice
payments to a flat rate of 25 percent of the stewardship payment for
each tier and have limited new practice payments to $10,000 for each
tier. As a result of these limits, the maximum total payment a producer
could receive (i.e., the total of the stewardship, existing practice,
and new practice payments) without an enhancement payment would be
$16,250 for Tier I, $23,125 for Tier II, and $26,875 for Tier III.
Therefore, in order to receive the full amount of CSP financial
assistance available for an enrollment tier (e.g., $20,000 for Tier I;
$35,000 for Tier II; and $45,000 for Tier III), the producer must agree
to implement enhancements. In addition, to encourage participants to
add new enhancements over the life of a contract, NRCS incorporated
variable enhancement payments into the fiscal year 2005 CSP contracts
that gradually reduce the annual payments for a contract's base
(initial) enhancements over the contract's term.[Footnote 67] Thus, to
compensate for this diminishing income, a producer would need to add
new enhancements over the life of a contract.
Potential for Duplication Still Exists and Duplicate Payments Have
Occurred:
Despite farm bill and NRCS regulatory measures and procedures that
lessen possible duplication between CSP and other programs, the
potential for duplication still exists and has occurred with regard to
CSP enhancement payments. For example, although some payments made
through CSP are unique to that program, payments for new conservation
practices or actions such as nutrient management can be made through
CSP and other programs, creating the potential for duplicate payments.
In addition, CSP payments for enhancement actions have the potential to
overlap with payments under other programs for conservation practices.
Regarding the latter possibility, we found a number of cases where
duplicate payments had been made for CSP enhancements and conservation
practices under other programs for the same conservation action on the
same land during the same year. In addition, NRCS lacks a comprehensive
process to identify potential duplicate payments or duplicate payments
already made.
Table 6 summarizes the types of conservation payments available through
CSP, EQIP, and WHIP.
Table 6: Conservation Payments Available through CSP, EQIP, and WHIP:
Payment type: Stewardship payment to reward prior conservation actions;
CSP: X;
EQIP: [Empty];
WHIP: [Empty].
Payment type: Existing practices payment for the cost of maintaining
previously implemented conservation practices;
CSP: X;
EQIP: [Empty];
WHIP: [Empty].
Payment type: Cost-share payment for the adoption of conservation
practices that meet nondegradation standards; these conservation
practices include land management practices (e.g., nutrient management
to reduce water pollution); vegetative practices (e.g., planting native
grasses to provide wildlife habitat); and structural practices (e.g.,
fencing to keep livestock out of streams);
CSP: X;
EQIP: X;
WHIP: X.
Payment type: Incentive payment for the adoption of land management
conservation practices that meet nondegradation standards (e.g., crop
residue management to reduce soil erosion);
CSP: [Empty];
EQIP: ; X;
WHIP: [Empty].
Payment type: Enhancement payment for conservation actions that exceed
minimum eligibility standards (e.g., delaying haying and grazing
pasture or grassland from April 15 to August 1 to improve habitat for
ground-nesting birds that reproduce during this period)[A];
CSP: X;
EQIP: [Empty];
WHIP: [Empty].
Sources: GAO analysis of CSP, EQIP, and WHIP provisions.
[A] The farm bill states that these enhancement payments are for
conservation practices that exceed the minimum requirements for the
applicable tier of CSP participation. Under these minimum requirements,
the level of conservation treatment must meet nondegradation standards
for the applicable resource concerns. In implementing CSP, NRCS has
made enhancement payments available for soil, nutrient, wildlife
habitat, pest, energy, air, irrigation water, and grazing management,
as well as locally identified conservation needs.
[End of table]
As indicated in the table, the farm bill allows cost-share payments for
the adoption of conservation practices that could be implemented
through any of these programs,[Footnote 68] creating the possibility
that a producer could receive duplicate payments for the same
conservation practice under CSP and another program. In reviewing
fiscal year 2004 contracts and payments data for CSP, EQIP, and WHIP,
we did not find evidence of duplicate payments related to funding the
adoption of the same conservation practice under CSP and another
program on the same operation during the same year. However, the
opportunity for such duplicate payments to have been made during fiscal
year 2004 was very low because only four producers received CSP
payments for the adoption of new conservation practices that year. NRCS
officials said that, because the fiscal year 2004 contracts were
approved in July 2004, the time remaining in the fiscal year was not
sufficient for most CSP participants to implement new conservation
practices and receive a payment. In addition, these officials said NRCS
encourages producers to use programs other than CSP to obtain financial
assistance for new conservation practices. As discussed, these other
programs generally offer a higher cost share for new practices than
offered under CSP. In the future, greater numbers of producers may
receive CSP payments for new conservation practices, increasing the
potential for duplicate payments.
The potential for duplicate payments also exists between CSP
enhancement payments and conservation practice payments made under
other programs. Each year, NRCS state offices develop lists of
conservation actions eligible for CSP enhancement payments in their
states. NRCS headquarters officials then review and approve the states'
lists. If the reviewing officials find that a proposed enhancement
includes conservation actions that do not exceed the minimum standard
for the related conservation practice, as defined by NRCS, they work
with the NRCS state office to revise the proposed enhancement. However,
some overlap may occur because a given conservation action can have a
different purpose under another program. For example, several states
offer CSP enhancement payments for the use of conservation crop
rotation for the purpose of breaking plant pest cycles to reduce the
need for pesticide applications. At the same time, these states offer
EQIP funding for the use of conservation crop rotation for the purposes
of reducing soil erosion, providing wildlife cover and food, and
improving soil organic matter. This overlap increases the potential for
a producer to receive two payments for the same conservation action on
the same land during the same year. The farm bill prohibits payments
under CSP and another conservation program for the same practice on the
same land. The CSP manual elaborates on this provision, stating that a
participant may not receive a CSP payment for enhancement activities if
the participant is also earning financial assistance payments through
other programs for the same practice or activity on the same land
during the same year.[Footnote 69]
Our file reviews and analysis of NRCS payments data for calendar year
2004 showed that duplicate payments have occurred. Specifically, we
found cases where a producer received duplicate payments from CSP and
EQIP for performing the same conservation action on the same land
during the same year. For example, in the course of performing limited
file reviews at several NRCS field offices, we found that a producer
had received a CSP enhancement payment and an EQIP conservation
practice payment for the same conservation action--establishing a small
grain cover crop--on the same tract of land during 2004. This producer
also was scheduled to receive the same duplicate payments during
2005.[Footnote 70]
Furthermore, our analysis of 2004 payments data for CSP, EQIP, and WHIP
revealed other cases in which a producer received a CSP enhancement
payment and an EQIP payment for performing a similar conservation
action during the same year. Our analysis of these data showed that 172
(or 8 percent) of the 2,180 producers who received a CSP payment in
2004 also received an EQIP payment that year as well. None of these
2,180 producers received a WHIP payment that year.[Footnote 71] In
analyzing the conservation actions funded for the 172 producers who
received both CSP and EQIP payments, we initially identified 72
producers who received payments that appeared to be for similar or
related conservation actions and may have been duplicates.
Specifically, in aggregate, these producers received a total of 121
payments under each program that were potentially duplicates. We then
selected 11 of these producers, who in aggregate received a total of 12
payments under each program, for more detailed analysis.[Footnote 72]
We discussed these 12 cases with NRCS field office officials to
determine if any of these payments were made for implementing the same
conservation action on the same land. In 6 of the 12 cases, a producer
received a CSP enhancement payment and an EQIP payment for conservation
actions that appeared to be similar (e.g., CSP and EQIP payments for
nutrient management). In the other 6 cases, a producer received a CSP
enhancement payment based on an index score that may have increased as
a result of a conservation action for which the producer received an
EQIP payment.
We discussed the first 6 cases--those in which a producer received a
CSP enhancement payment for a conservation action and an EQIP payment
for a similar conservation action--with NRCS field office officials.
Based on these discussions, we determined that duplicate payments were
made in 4 of these 6 cases. For example, in one instance, a producer
received a CSP pest management enhancement payment of $9,160 for a
conservation crop rotation. On the same parcel of land, the producer
also received an EQIP payment of $795 for the same conservation action-
-conservation crop rotation.[Footnote 73] Regarding these 4 cases, in 2
instances, NRCS field office officials acknowledged that duplicate
payments had occurred, i.e., that the producer received a CSP
enhancement payment and an EQIP conservation practice payment for the
same conservation action on the same land during the same year. In
these cases, these officials said the duplicate payments resulted from
simple error. In the other 2 cases, NRCS field office officials held
the view that even though the payments were for the same conservation
action, if they were made for different conservation purposes (e.g., a
CSP-funded conservation crop rotation to break pest cycles and an EQIP-
funded conservation crop rotation to improve soil quality), then they
were not duplicates. However, the farm bill clearly prohibits payments
under CSP and another conservation program for the same practice on the
same land. In addition, NRCS's Conservation Programs Manual elaborates
on this provision, stating that a participant may not receive a CSP
payment for enhancement activities if the participant is also earning
financial assistance payments through other programs for the same
practice or activity on the same land during the same year. NRCS state
office and headquarters officials agreed with our interpretation that
in such situations producers should not receive payments under both
programs.
We also discussed the other 6 cases--those in which a producer received
a CSP enhancement payment based on an index score that may have
increased as a result of a conservation action for which the producer
received an EQIP payment in the same year--with NRCS field office
officials. In 4 of these cases, a producer received a CSP soil
management enhancement payment based on a soil conditioning index score
while also receiving an EQIP payment for conservation practices that
reduce soil erosion. For each of these cases, these officials stated
that the EQIP-funded conservation practice had contributed to
increasing the soil conditioning index score and, as a result, had
increased the CSP enhancement payment. For example, a producer may
implement an EQIP-funded soil conservation practice that is factored
into the calculation of a soil conditioning index score, increasing the
index score from 0.2 to 0.5. If CSP soil management enhancement
payments in that producer's state increase by $1.16 per acre for each
0.1 increase in the soil conditioning index, the producer's enhancement
payment would increase by $3.48 per acre.
The NRCS field office officials we interviewed had mixed views as to
whether these payments were duplicates. We believe such payments were,
at least in part, duplicates. However, an NRCS headquarters official
stated that such payments are not duplicates. According to this
official, EQIP payments are intended to compensate producers for
"input" costs associated with installing or initiating conservation
actions, while CSP enhancement payments are intended to reward
producers for conservation "outputs" (i.e., benefits derived from
conservation actions). Therefore, the official said, such payments are
not duplicates. We do not agree with this rationale. Payments for
producer "input" costs under EQIP are made because of their resulting
conservation "outputs," and payments for CSP conservation "outputs" are
made to compensate producer "input" costs. In other words, the programs
are both compensating the same action but are doing so either before or
after the fact. To receive payments from both for the same action would
thus clearly be duplication. Moreover, we continue to consider such
payments to be inconsistent with both the farm bill prohibition and
NRCS's guidance on duplicate payments.
In the other 2 cases related to index scores, the producers received
CSP enhancement payments based on a wildlife habitat management index
score while also receiving an EQIP payment for conservation practices
that may improve wildlife habitat. In one of these cases, the EQIP-
funded conservation practice was not taken into consideration in
determining the index score because the practice did not affect habitat
for the species of concern, bobwhite quail. In the other case, an NRCS
field office official stated that, to prevent the payment from being a
duplicate, he had not included the EQIP-funded conservation practice in
calculating the index score. We agreed that duplicate payments had not
occurred in these 2 cases.
NRCS headquarters officials stated the agency lacks a comprehensive
process, such as an automated system, to either preclude duplicate
payments or identify them after a contract has been awarded. Instead,
these officials said that NRCS relies on the institutional knowledge of
its field office staff and the records they keep to prevent duplicate
payments. Several NRCS state officials noted that the field staff are
familiar with the assistance that producers in their county receive
under various programs and suggested that these staff would reject a
CSP application for a conservation activity already financed through
another program. However, reliance on the institutional knowledge of
staff can be problematic, especially since NRCS reported in June 2003
that almost 50 percent of its field-level workforce would be eligible
to retire in 5 years, representing a serious loss of knowledge,
experience, and institutional memory as these employees are replaced
with less-experienced, newly hired employees.[Footnote 74] In addition,
because CSP sign-ups operate under a compressed time schedule,
additional staff--who do not have knowledge of local producers' prior
and current participation in conservation programs--are often
temporarily relocated from other parts of a state to assist in
developing CSP contracts. These staff would not be familiar with local
producers and their history of conservation program participation.
A number of NRCS officials acknowledged the need for a comprehensive
process to prevent duplicate payments and said NRCS is considering a
modification of CSP contract information stored in the Program
Contracts System (ProTracts), NRCS's contract management information
system, that would allow the agency to identify potential duplicate
payments before CSP contracts are approved. For example, these
officials said NRCS is considering a modification to ProTracts that
would flag a planned CSP enhancement payment that may duplicate a
conservation practice payment made under another program, such as EQIP.
However, these officials said such a modification could require adding
more detailed information on enhancement payments to ProTracts than
currently exists within the system. By the same token, these officials
also acknowledged a need to develop a process to efficiently identify
duplicate payments--such as those we found--already being made under
CSP contracts issued in fiscal years 2004 and 2005. At present, NRCS
does not know the extent of these duplicate payments or their aggregate
dollar value. Although the total dollar amount of duplicate payments
may be relatively small at present, in the future, as the program grows
to include more participants, the frequency and total dollar value of
duplicate payments could become significant. Furthermore, since CSP and
EQIP offer producers multiple-year contracts, these duplicate payments,
if undetected, would continue in subsequent years. To the extent that
duplicate payments are being made, the effectiveness of CSP and the
other programs involved is undermined and, because of limited funding,
some CSP enrollment categories or subcategories that otherwise would
have been funded may not be funded. As a result, some eligible
producers may not receive CSP payments that they otherwise qualify for
and would have received in the absence of these erroneous payments.
Finally, NRCS has authority to recover duplicate payments. CSP
contracts, by way of reference, include a clause stating that CSP
participants cannot receive duplicate payments. Under a CSP contract,
as required in the farm bill, a producer agrees that on violation of
any term or condition of the contract the producer will refund payments
and forfeit all rights to receive payments or to refund or accept
adjustments to payments, depending on whether the Secretary of
Agriculture determines that termination of the contract is or is not
warranted, respectively.
Conclusions:
Despite farm bill provisions and NRCS actions to control CSP costs,
inconsistencies in the wildlife habitat assessment criteria used by
NRCS state offices for determining producer payments in the highest CSP
payment category may undermine these cost controls. Specifically, some
state offices have used criteria less stringent than those outlined in
the NRCS national guidance, potentially resulting in Tier III payments
to producers who are not providing the wildlife habitat benefits
intended by the national criteria. Based on NRCS officials'
observations and the weaknesses we found in some state offices'
criteria, we believe it is highly likely that such payments have
occurred. Currently, NRCS does not systematically review and field
check its state offices' criteria so that inconsistencies with the
national guidance can be detected and the agency can determine whether
Tier III contracts are providing the wildlife habitat benefits
intended. Furthermore, because there is no reference to the national
guidance in NRCS's Conservation Programs Manual, some NRCS state and
field offices may not know what wildlife habitat assessment criteria to
follow or may fail to appreciate the importance of the national
guidance.
In addition, despite farm bill provisions and NRCS regulations and
procedures designed to prevent CSP from duplicating payments made by
other conservation programs, the potential for duplication still
exists, and duplicate payments for the same practice or activity on the
same land have occurred. Duplicate payments reduce the effectiveness of
the programs involved and, because of limited funding, may result in
some producers not receiving program benefits for which they are
otherwise eligible. For these reasons, NRCS also should use its
authority to recover duplicate payments already made. At present, NRCS
lacks a comprehensive process, such as an automated system, to identify
payments that are potential duplicates before they are made. The agency
also lacks an effective way to identify duplicate payments already made
under existing CSP contracts.
Without question, NRCS's challenge in implementing CSP--a new, unique,
and complex conservation program--has been formidable. However, we
believe that factors such as the substantial increase in conservation
funding authorized by the 2002 farm bill; the extent of agriculture's
continuing contribution to impaired soil, water, air, and wildlife
habitat; and the importance of farmers and ranchers as stewards of the
nation's natural resources underscore the need for NRCS to manage CSP
in a way that ensures consistent program implementation nationwide,
achieves intended environmental benefits, and prevents duplicate
payments.
Recommendations for Executive Action:
To improve NRCS's implementation of the Conservation Security Program,
we recommend that the Secretary of Agriculture direct the Chief of NRCS
to take the following four actions:
* Review and field check each NRCS state office's wildlife habitat
assessment criteria to ensure that states use consistent criteria and
achieve the habitat benefits intended by the national guidance;
* Include a reference to the national guidance for wildlife habitat
assessment criteria in NRCS's Conservation Programs Manual;
* Develop a comprehensive process, such as an automated system, to
review CSP contract applications to ensure that CSP payments, if
awarded, would not duplicate payments made by other USDA conservation
programs; and:
* Develop a process to efficiently review existing CSP contracts to
identify cases where CSP payments duplicate payments made under other
programs and take action to recover appropriate amounts and to ensure
that these duplicate payments are not repeated in fiscal year 2006 and
beyond.
Agency Comments and Our Evaluation:
We provided a draft of this report to NRCS for review and comment. We
received written comments from NRCS's Chief, which are reprinted in
appendix VIII. Among other things, NRCS stated that our report provides
valuable information that will help NRCS to improve implementation of
CSP. NRCS also provided us with suggested technical corrections, which
we have incorporated into this report, as appropriate.
NRCS generally agreed with our findings and recommendations and
discussed the actions that it has taken, is taking, or plans to take to
address our recommendations. Regarding our first two recommendations,
while acknowledging that problems exist, NRCS indicated that it
recently has taken or is considering corrective actions other than
those suggested in our recommendations. For example, because some NRCS
state offices have not fully adhered to the agency's national guidance
for wildlife habitat assessment criteria, NRCS said that it issued a
national bulletin to all of its state offices during the fiscal year
2006 CSP sign-up to reemphasize the guidance that these offices must
use in developing their wildlife habitat assessment criteria. However,
while the promulgation of this bulletin should be helpful, we still
believe that NRCS should review and field check each state office's
assessment criteria to ensure its adherence to the national guidance.
In the second case, in lieu of including a reference in its
Conservation Programs Manual, NRCS said that it is proposing that NRCS
wildlife biologists develop a special technical note that would
describe how the national guidance for wildlife habitat assessment
criteria should be used by NRCS state offices. Again, while we support
this step, we still believe that the inclusion of a reference in the
Conservation Programs Manual to the national guidance would help to
emphasize its importance to NRCS state and field-level employees.
Regarding our third recommendation, NRCS indicated that other
automation features will be developed and incorporated into NRCS's
contracting software to avoid duplicate payments. In the meantime, NRCS
said that it had implemented other procedures to help eliminate the
occurrence of duplicate payments. For example, for the fiscal year 2006
sign-up, NRCS is requiring applicants to complete a form that asks an
applicant to certify whether or not they are receiving payments from
another conservation program on any of the land being offered for
enrollment in CSP. In addition, NRCS said it plans to revise the CSP
contract appendix to include a statement about prohibitions on
duplicative payments. Regarding our fourth recommendation, NRCS said
that it has improved management oversight to cross-check payments made
to CSP participants and participants under other conservation programs
to determine if duplicative payments have been made. If duplicative
payments have been made, NRCS said it has contracting procedures that
can be utilized to recover the payments.
We also provided a draft of this report to CBO and OMB for review and
comment. These agencies provided us with suggested technical
corrections, which we incorporated into the report, as appropriate.
We are sending copies of this report to interested congressional
committees; the Secretary of Agriculture; the Director, CBO; the
Director, OMB; and other interested parties. We also will make copies
available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at [Hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or robinsonr@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix IX.
Sincerely yours,
Signed by:
Robert A. Robinson:
Managing Director, Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
At the request of the Chairman, Senate Committee on Appropriations, we
reviewed issues related to the U.S. Department of Agriculture's (USDA)
implementation of the Conservation Security Program (CSP).
Specifically, we determined (1) why Congressional Budget Office (CBO)
and Office of Management and Budget (OMB) cost estimates for CSP
generally increased over time; (2) what authority USDA has to control
CSP costs and what cost control measures are in place; and (3) what
legislative and regulatory measures exist to prevent duplication
between CSP and other USDA conservation programs, and what duplication,
if any, has occurred.
To determine why CSP cost estimates have increased, we interviewed CBO
and OMB officials and reviewed documentation they provided. At each
agency, we spoke with budget analysts about their agency's estimating
practices, including the types of data, assumptions, and models used to
prepare cost estimates. We did not attempt to re-estimate or audit the
CBO or OMB estimates or data discussed in this report. For comparison
purposes, we also interviewed USDA officials, including Natural
Resources Conservation Service (NRCS) and Economic Research Service
officials, and reviewed documentation they provided related to NRCS's
benefit-cost assessments of CSP. NRCS prepared these assessments in
conjunction with its issuance of interim final and amended interim
final rules for the program, published in the Federal Register in June
2004 and March 2005, respectively. In addition, we interviewed
officials at the Congressional Research Service (CRS) and reviewed
documentation they provided, including CRS reports that discuss CSP
cost and implementation issues.
We also sought the views of other interested stakeholder organizations,
such as farm, conservation, and environmental organizations, as to why
the estimated costs of CSP have risen substantially. These
organizations included the American Farm Bureau Federation, the
National Association of Conservation Districts, the Soil and Water
Conservation Society, the Sustainable Agriculture Coalition, the
Theodore Roosevelt Conservation Partnership, the Wildlife Management
Institute, Ducks Unlimited, and Environmental Defense. At each
organization, we interviewed knowledgeable officials and reviewed
documentation they provided.
To determine USDA's authority to control CSP costs and the cost control
measures in place, we reviewed relevant authorizing and appropriations
legislation and related legislative history. This legislation includes
the Farm Security and Rural Investment Act of 2002 (the farm
bill);[Footnote 75] USDA appropriations acts for fiscal years 2004,
2005, and 2006;[Footnote 76] and other legislation that capped CSP
funding for the 11-year period, fiscal years 2003 through
2013,[Footnote 77] and for the 10-year period, fiscal years 2005
through 2014.[Footnote 78] In addition, we interviewed USDA officials
and reviewed documentation they provided at NRCS, the Economic Research
Service, the Office of the General Counsel, and the Office of Budget
and Program Analysis. We also reviewed USDA's budget explanatory notes
for fiscal years 2004 through 2007; NRCS's CSP regulations and
associated public comments and benefit-cost assessments; and NRCS's
Conservation Programs Manual and related guidance pertaining to CSP
implementation. Furthermore, we interviewed officials and reviewed
documentation they provided at farm, conservation, and environmental
organizations and at CRS.
Concerning cost control measures, we also examined NRCS internal
management controls (internal controls) related to ensuring that CSP
cost control measures are properly and consistently implemented and
that CSP contract payments are accurately determined and
tracked.[Footnote 79] In particular, we focused on controls related to
the agency's (1) verification of producer-reported data used to
determine program eligibility and payment levels; (2) monitoring of
producer implementation of CSP contract provisions; and (3) oversight
of program implementation by its field offices, including oversight of
the offices' compliance with legislative and regulatory program
provisions. To do this, we interviewed NRCS officials and reviewed
documentation they provided at the Operations Management and Oversight
Division of the Office of Strategic Planning and Accountability. This
documentation included NRCS's General Manual and Conservation Programs
Manual. It also included an internal draft study prepared by the
division's Oversight and Evaluation Staff regarding CSP's
implementation. Among other things, this draft study discusses internal
controls related to the program's application process, payment tier
designation criteria, and award of contracts across tiers and
designated watersheds. In addition, we reviewed USDA's Management
Control Manual and Management Accountability and Control Regulation.
Furthermore, we reviewed, from USDA, relevant Office of Inspector
General reports and the fiscal year 2005 performance and accountability
report; and, from NRCS, the strategic plan for fiscal years 2003
through 2008; the fiscal year 2003 performance plan;[Footnote 80]
performance reports for fiscal years 2003 and 2004; the fiscal year
2004 accomplishments report; and business plans for fiscal years 2004
and 2005.
Finally, concerning cost controls and related internal controls, we
conducted structured interviews with the relevant NRCS official(s)--
usually the CSP program manager or Assistant State Conservationist in a
given NRCS state office--who had primary responsibility for
implementing CSP in each of the 18 priority watersheds included in the
fiscal year 2004 sign-up.[Footnote 81] These 18 watersheds also were
among the 220 watersheds included in the fiscal year 2005 sign-up. For
these interviews, we first developed and pretested a data-collection
instrument to guide the interviews.[Footnote 82] In developing the
instrument, we met with officials in NRCS headquarters and reviewed
documentation they provided to gain a thorough understanding of CSP
implementation issues and related internal controls. To pretest the
instrument, we contacted NRCS officials in Indiana and Pennsylvania who
were involved in the fiscal year 2004 sign-up. After conducting the
pretest, we interviewed the respondents to ensure that (1) the
questions were clear and unambiguous, (2) the terms we used were
precise, (3) the questions asked were independent and unbiased, and (4)
answering the questions did not place an undue burden on the agency
officials interviewed. On the basis of feedback from the pretests, we
modified the questions as appropriate. We then conducted the structured
interview by phone with NRCS officials representing each of the 18
watersheds. Table 7 lists the 18 watersheds included in the fiscal year
2004 sign-up, the lead NRCS state office for each watershed, and the
number of CSP contracts awarded in each watershed.
Table 7: Priority Watersheds, Lead NRCS State Offices, and CSP
Contracts Awarded in the Fiscal Year 2004 CSP Sign-up:
Priority watershed: Auglaize;
Lead NRCS state office: Ohio;
CSP contracts awarded: 189.
Priority watershed: Blue Earth;
Lead NRCS state office: Minnesota;
CSP contracts awarded: 280.
Priority watershed: East Nishnabotna;
Lead NRCS state office: Iowa;
CSP contracts awarded: 145.
Priority watershed: Hondo;
Lead NRCS state office: Texas;
CSP contracts awarded: 16.
Priority watershed: Kishwaukee;
Lead NRCS state office: Illinois;
CSP contracts awarded: 191.
Priority watershed: Lemhi;
Lead NRCS state office: Idaho;
CSP contracts awarded: 18.
Priority watershed: Little;
Lead NRCS state office: Georgia;
CSP contracts awarded: 37.
Priority watershed: Little River Ditches;
Lead NRCS state office: Missouri;
CSP contracts awarded: 189.
Priority watershed: Lower Chippewa;
Lead NRCS state office: Wisconsin;
CSP contracts awarded: 207.
Priority watershed: Lower Little Blue;
Lead NRCS state office: Kansas;
CSP contracts awarded: 143.
Priority watershed: Lower Salt Fork Arkansas;
Lead NRCS state office: Oklahoma;
CSP contracts awarded: 176.
Priority watershed: Lower Yellowstone;
Lead NRCS state office: Montana;
CSP contracts awarded: 49.
Priority watershed: Moses Coulee;
Lead NRCS state office: Washington;
CSP contracts awarded: 43.
Priority watershed: Punta de Agua;
Lead NRCS state office: New Mexico;
CSP contracts awarded: 19.
Priority watershed: Raystown;
Lead NRCS state office: Pennsylvania;
CSP contracts awarded: 36.
Priority watershed: Saluda;
Lead NRCS state office: South Carolina;
CSP contracts awarded: 76.
Priority watershed: St. Joseph;
Lead NRCS state office: Indiana;
CSP contracts awarded: 217.
Priority watershed: Umatilla;
Lead NRCS state office: Oregon;
CSP contracts awarded: 149.
Priority watershed: Total;
Lead NRCS state office: Dash;
CSP contracts awarded: 2,180.
Source: GAO analysis of NRCS data (as of July 27, 2005)
[End of table]
We did not conduct structured interviews with officials representing
the lead offices for all 220 priority watersheds included in the fiscal
year 2005 sign-up because (1) time frames for completing this sign-up
and awarding contracts fell beyond the time frames for completing this
portion of our work and (2) the 18 watersheds covered by our interviews
were included in both the fiscal year 2004 and fiscal year 2005 sign-
ups and provided wide geographic coverage.
To determine what legislative and regulatory measures exist to prevent
duplication between CSP and other programs and what duplication, if
any, has occurred, we reviewed relevant authorizing legislation and
program regulations and interviewed USDA officials and reviewed
documentation they provided at NRCS, the Economic Research Service, the
Office of the General Counsel, and the Office of the Inspector General.
We also included questions in our structured interviews regarding
potential duplication between CSP and other programs. In addition, we
interviewed NRCS officials responsible for developing a plan to
coordinate USDA's land retirement and agricultural working land
conservation programs to achieve the goals of (1) eliminating
redundancy, (2) streamlining program delivery, and (3) improving
services provided to agricultural producers. As required in the farm
bill, USDA was to have submitted a report by December 31, 2005, to the
Senate Committee on Agriculture, Nutrition, and Forestry and the House
Committee on Agriculture that describes this plan and the means by
which USDA will achieve these goals. As of March 2006, USDA was still
preparing this report (USDA officials indicated that the plan and
report will be one-in-the-same document).
Furthermore, to identify potential duplication, we visited and
conducted file reviews at NRCS field offices in two of the watersheds-
-Lower Chippewa and St. Joseph--that were included in the fiscal year
2004 and fiscal year 2005 sign-ups. We selected these watersheds based
on several factors, including (1) their similarity to most of the other
18 watersheds included in both sign-ups in terms of the predominant
type of land use (i.e., cropland), (2) the relatively high number of
financial assistance contracts provided to producers in these
watersheds under CSP and other USDA conservation programs, and (3) the
availability of NRCS field staff to meet with us at the time. In
addition, our selection of watersheds reflected a wide variation in the
percent of total payments made to producers in each watershed under
Tier III, the highest CSP payment category--41 percent in Lower
Chippewa versus 75 percent in St. Joseph. Finally, the Lower Chippewa
watershed lies entirely within the state of Wisconsin; in contrast, the
St. Joseph watershed straddles three states--Indiana, Michigan, and
Ohio--and thus multiple NRCS state offices were involved in
implementing CSP in this watershed (Indiana was the lead office). In
each watershed, we visited two NRCS county offices to review the
contract files of producers who received a CSP payment in fiscal 2004
and an Environmental Quality Incentives Program (EQIP) payment or a
Wildlife Habitat Incentives Program (WHIP) payment in one or more years
during fiscal years 2002 through 2004.[Footnote 83] We chose the
offices visited because they had made relatively large numbers of
payments under these programs.
We also obtained and analyzed data from NRCS's Program Contracts System
(ProTracts) electronic database regarding calendar year 2004 payments
made under CSP and two other USDA conservation programs--EQIP and WHIP.
In particular, we compared payment information for CSP and EQIP to
identify producers who received payments under both programs that year.
We then did further analysis to determine cases in which it appeared a
producer had received payments under both programs for the same
conservation practice or activity, on the same land, in the same year.
We discussed payments received by 11 producers with NRCS officials to
determine the actual extent of duplication, if any. We selected these
11 producers from a cross section of states--Nebraska, Oklahoma,
Oregon, and South Carolina. In general, these states had the highest
number of cases of potential duplication. In each state, we contacted
NRCS field office officials in the county with the largest number of
cases to discuss whether the payments were duplicates. Our choice of
these producers, states, and counties was not intended to be
representative for projection purposes. Finally, we interviewed
officials and reviewed documentation they provided at farm,
conservation, and environmental organizations, CRS, the U.S. Fish and
Wildlife Service in the Department of the Interior, and the U.S.
Environmental Protection Agency; conducted a literature search to
identify relevant studies and articles; and attended a CSP training
workshop at USDA headquarters.
We conducted our review between February 2005 and February 2006 in
accordance with generally accepted government auditing standards. We
conducted a data reliability assessment of the fiscal years 2004 and
2005 payments data for CSP, EQIP, and WHIP and determined the data to
be sufficiently reliable. For the data obtained from the other sources
noted above, we did not independently verify the data, but we discussed
with these sources, as appropriate, the measures they take to ensure
the accuracy of these data. For the purposes for which the data were
used in this report, these measures seemed reasonable.
[End of section]
Appendix II: CSP Payments Information for Fiscal Years 2004 and 2005:
Tables 8 through 14 summarize Conservation Security Program (CSP)
payments information for fiscal year 2004. Tables 15 through 18
summarize similar information for fiscal year 2005, including payments
for new and existing (2004) contracts. Table 19 summarizes information
on the acres enrolled in CSP by land type during these fiscal years.
Although the farm bill called for the establishment of CSP in fiscal
year 2003, the Natural Resources Conservation Service (NRCS) held the
first program sign-up in fiscal year 2004, after developing program
regulations, training its field staff, and introducing the program to
producers and stakeholder groups. Information on CSP payments for
fiscal year 2006 was not available at the time of our review.
To develop tables 8 through 18, we used payments information from
NRCS's Program Contracts System (ProTracts). Among other things,
ProTracts is used to manage and monitor the CSP application,
contracting, and payment process. ProTracts is a feeder system into the
U.S. Department of Agriculture's (USDA) Foundation Financial
Information System (Foundation System), the department's official
accounting system for making payments for current and prior year
programs. The Foundation System records obligations and payments made
and is the source of data used in financial statements for all USDA
programs. In general, the payments data in the Foundation System is
considered official, whereas payments data in ProTracts is considered
preliminary until it has been checked, corrected, and migrated to the
Foundation System.[Footnote 84] For this reason, payments data taken
from these systems may not be consistent. However, in order to separate
CSP payments data by tier, payment type, and enhancement type, it was
necessary to use data from ProTracts; this level of detail or
disaggregation was not possible using data from the Foundation System.
Table 8: Total CSP Payments and Contracts by Tier, Fiscal Year 2004:
Tier: I;
Payments: $5,696,212;
Percentage of total payments: 17%;
Contracts: 785;
Percentage of total number of contracts: 36%;
Average payment: $7,256.
Tier: II;
Payments: 16,738,736;
Percentage of total payments: 49;
Contracts: 886;
Percentage of total number of contracts: 41;
Average payment: 18,892.
Tier: III;
Payments: 11,022,446;
Percentage of total payments: 35;
Contracts: 509;
Percentage of total number of contracts: 23;
Average payment: 23,620.
Tier: Total;
Payments: $34,457,394[A];
Percentage of total payments: 100%;
Contracts: 2,180;
Percentage of total number of contracts: 100%;
Average payment: $15,806.
Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).
Note: The percentages may not total 100 due to rounding.
[A] Our analysis of NRCS ProTracts data indicates that total CSP
payments in fiscal year 2004 were $34,457,394 (or $34.5 million), as
reflected in the table. However, according to an NRCS official, more
recent data in USDA's Foundation Financial Information System indicates
that these total payments were $34,556,220 (or $34.6 million).
[End of table]
Table 9: Total CSP Payments by Payment Type, Fiscal Year 2004:
Payment type: Stewardship;
Payments: $5,401,915;
Percentage of total payments: 16%.
Payment type: Existing practice;
Payments: 1,355,826;
Percentage of total payments: 4.
Payment type: New practice;
Payments: 5,148;
Percentage of total payments:
