(a) NRCS may modify a conservation stewardship contract, if—

(1) The participant agrees to the modification; and

(2) NRCS determines the modification is in the public interest.

(b) NRCS may allow modification to a conservation stewardship contract to accommodate certain changes in the agricultural operation, including—

(1) Removing contract acres the participant will enroll in CRP, protect with a wetland reserve easement through the Agricultural Conservation Easement Program (ACEP), or enroll in other Federal or State programs that offer greater natural resource protection through an easement, long-term contract, land use restrictions, or similar authority as determined by NRCS. NRCS may reduce payments for such modified contracts to reflect the modified acreage and performance. Participants will not be subject to liquidated damages or refund of payments received for enrolling land in these programs.

(2) Accommodating other limited changes, in response to a participant's request made prior to implementing the change, that would take land out of production or convert an area under contract to a different land use. These situations apply only to land for which the participant has and will retain effective control, and not for situations of involuntary loss of land.

(3) Allowing a participant to substitute a conservation activity as long as the level of conservation performance agreed to at the time of enrollment remains the same or is improved with implementation of the substitute activity.

(i) Adjustments to existing activities may occur consistent with conservation performance requirements from §1470.23.

(ii) [Reserved]

(4) Prior to approval, NRCS must determine that any modification under this section is authorized by the provisions of 16 U.S.C. 3838d-3838g.

(c) A contract modification under this section will not increase the scheduled annual payments under the program, except to make minor adjustments to a conservation activity, as determined by NRCS; implement an appeal determination; correct an administrative error as approved by NRCS; or to adjust payment limitations. Contracts transferred from an individual or entity to a joint operation will retain the original contract limit outlined in §1470.24(g).

(d) Within the time specified in the contract, a participant must provide NRCS with written notice regarding any voluntary or involuntary loss of control of any acreage under the CSP contract, which includes changes in a participant's ownership structure or corporate form. Failure to provide timely notice may result in termination of the entire contract.

(e) Unless NRCS approves a transfer of contract rights under this paragraph (e), a participant losing control of any acreage may constitute a violation of the CSP contract and NRCS may terminate the contract and require a participant to refund all or a portion of any financial assistance provided. NRCS may approve a transfer of the contract if—

(1) NRCS receives written notice that identifies the new producer who will take control of the acreage, as required in paragraph (d) of this section;

(2) The new producer meets program eligibility requirements within a reasonable time frame, as specified in the CSP contract;

(3) The new producer agrees to assume the rights and responsibilities for the acreage under the contract; and

(4) NRCS determines that the purposes of the program will continue to be met despite the original participant's losing control of all or a portion of the land under contract.

(f) Until NRCS approves the transfer of contract rights, the new producer is not a participant in the program and may not receive payment for conservation activities commenced prior to approval of the contract transfer.

(g) NRCS may not approve a contract transfer and may terminate the contract in its entirety if NRCS determines that the loss of control of the land was voluntary, the new producer is not eligible or willing to assume responsibilities under the contract, or the purposes of the program cannot be met.

(h) In the case of death, incompetency, or disappearance of any participant, NRCS may, as identified in the CSP contract—

(i) Terminate the contract;

(ii) Make any payments due under this part pursuant to guidance under applicable provisions of 7 CFR parts 707 and 1400 (including payment to successor(s)); or

(iii) Take any further action that the Chief determines is fair and reasonable in light of all of the circumstances.