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Federal Register / Vol. 86, No. 22 / Thursday, February 4, 2021 / Rules and Regulations
Comment: NRCS received comment recommending modification of the penalty for failure to complete BPS
transactions to a sliding scale of restitution rather than full repayment.
Response: The ACEP statute requires that the Secretary shall be reimbursed for the entirety of the Federal share of the cost of the agricultural land easement by the eligible entity if the eligible entity fails to transfer ownership. NRCS does not have any flexibility with respect to the level of restitution and therefore no change is made to the regulation in response to this issue.
Comment: NRCS received comment requesting that eligibility for BPS
transactions be expanded to include land owned by State and local governments.
Response: The statute identifies eligible land as private or tribal land, which land owned by a State or local government is not. However, this limitation does not preclude the involvement of a State or local government in a BPS transaction. A
state or local government can serve as the interim easement holder while a non-governmental-eligible entity serves as the landowner until the land can be transferred to a qualified farmer or rancher. No change is made to the regulation in response to this issue.
Comment: NRCS received comment requesting that, in the development of its policy for BPS transactions, the entity not be required to identify the landowner or sale price during the application and agreement phase.
Response: NRCS does not require the identification of the landowner or sale price during the application phase. The timing of the identification of the landowner and the sale price is specified in the ALE-agreement terms and based on the specific BPS
transaction type as either a pre-closing or post-closing transfer. No change is made to the regulation in response to this issue.
Comment: NRCS received comment requesting that land eligibility provisions be changed for BPS
transactions, including removal of the imminent threat test example or addition of advancing program goals as a basis for eligibility.
Response: To align with the Conference Report to Accompany H.R.
2Agriculture Improvement Act of 2018 Managers Report, the ACEP
ALE eligible land definition for BPS
transactions was modified to allow for agricultural land to be owned by an eligible entity on a transitional basis to qualify for program participation, provided that the land subject to the
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agricultural land easement be transitioned to farmer or rancher ownership within 3 years. Due to the transitional nature of this ownership, there are risks that the Federal investment in ACEPALE benefits will not be fully realized, risks that do not exist with standard ALE transactions.
However, in some circumstances, such as an imminent threat of development, this risk is outweighed by the benefit of placing an easement on land not owned by an otherwise eligible private or Tribal landowner at the time the Federal funds are invested in the easement.
NRCS therefore states in the ACEP
regulation that, to be eligible for a BPS
transaction, the land must be subject to conditions that necessitate the ownership of the parcel by the eligible entity on a transitional basis prior to the creation of an agricultural land easement, and that these conditions may include land subject to an imminent threat of development, including, but not limited to, planned or approved conversion of grasslands to more intensive agricultural uses. Other conditions may also satisfy that requirement. NRCS made a slight editorial clarification in the regulation with respect to the requirement that the eligible entity must, within 12-months of the BPS agreement, have completed the initial purchase of the land or have demonstrated that completion of the purchase of the land is imminent.
No other change is made to the regulation in response to this issue.
Comment: NRCS received comment on the issue of merger of title in BPS
transactions, including comment recommending deed term stating merger does not apply. Another comment encouraged NRCS and Office of the General Counsel to rely on an opinion of counsel eligible to practice in the State in which the ALE project is located to the effect that no merger would result through the transaction if the eligible entity: 1 Developed strong anti-merger language to allow it to grant an agricultural land easement to itself while still holding the fee title to the property, and then 2 reaffirmed the agricultural land easement at the time the eased parcel is sold to a farmer or rancher.
Response: ACEPALE is a nationwide program and State law varies on the effectiveness of an anti-merger clause;
however, in general, entities may include a no merger clause in ALE
deeds. However, NRCS does not believe that the combination of an anti-merger clause with the suggested attorneys opinion sufficiently allows an eligible entity to temporarily hold the easement and the underlying fee at the same time.

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NRCS contemplated this proposed BPS
transaction structure in response to previous public comments. The comment received does not introduce new information resulting in a different determination with respect to the legal issues of easement creation, as an easement, by definition, are the rights held by someone in the land owned by another and is created at the time of the transfer to the other person.
The article supplied by the respondent reaffirmed this concept by identifying cases where courts determined that the doctrine of merger was not applicable due to the transfer of an easement to a third party. Merger of title addresses the extinguishment of an easement right due to a subsequent acquisition of fee title, while the BPS
transactions present issues of easement creation. In addition to these issues, the conflict of interest inherent in this type of ownership scenario, which would impact enforcement, monitoring, and management of the easement and property, would not be mitigated by including an anti-merger provision. No change is made to the regulation in response to this issue.
Comment: NRCS received comment that parcel substitutions for BPS
transactions should be allowed.
Response: Due to the unique and complex nature of BPS transactions, the ALE agreement includes terms that are specific to the individual transaction and ultimately constitute the legal arrangement being entered into relating to land owned . . . by an eligible entity for the purchase of an agricultural land easement on that particular piece of land. In contrast, the terms of the standard ALE agreement and contract appendix are applied universally to every parcel funded. No change is made to the regulation in response to this issue.
Comment: NRCS received comment recommending that changes to transaction type pre-closing versus post-closing transfer be allowed after entering into agreement.
Response: NRCS identified two types of BPS transactions in the interim rule:
pre-closing and post-closing transfers, which are differentiated based on the timing of the sale of the fee title interest in the land to a qualified farmer or rancher relative to the timing of securing the agricultural land easement.
The regulation specifies the requirements and ALE-agreement terms that apply to both types. NRCS will address in the terms of the ALE
agreement how an eligible entity may request a modification to an ALEagreement to change between these two types of BPS transactions. No change is
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