Farm Conservation Bill Lifts Payment Caps, Mandates Water Agreements for Eligible Landowners

The Conservation Reserve Enhancement Program Improvement Act of 2025 is shaking up how the government pays farmers to take environmentally sensitive land out of production. If you’re a farmer or landowner in the Conservation Reserve Enhancement Program (CREP), this bill gives you new flexibility on how you get paid, but it also tightens up the rules—and removes some financial limits—on federal farm payments.

The New Payment Playbook: Flexibility and Fairness

Right now, annual payments under a CREP contract are usually spread evenly over the contract term. This bill changes Section 1231A of the Food Security Act, allowing participants to choose how those annual payments are allocated across the years of the agreement. Think of it like deciding whether you want equal monthly installments on a loan or if you want to front-load or back-load the payments depending on your cash flow needs. This small change offers significant financial flexibility for busy farmers.

More importantly, the bill corrects a long-standing issue for farmers involved in water conservation. If your CREP agreement involves permanently retiring water rights, your annual payment must now be based on the higher rate paid for irrigated land. For those who use dryland farming practices (where you don't irrigate), the payment rate will be the difference between the irrigated rate and the dryland rate. The best part? If you signed a dryland agreement before this law and were getting the lower rate, the Secretary must retroactively adjust your contract to the higher rate going forward. This is a big win for fairness and pocketbook relief for existing dryland farmers.

Mandatory Conservation and the Fine Print

While the payment changes are attractive, the bill introduces a notable shift in language that affects water conservation agreements. Previously, a landowner could enter into an agreement focused on drought and water conservation. Under this bill, if an owner or operator meets the criteria, they shall enter into the agreement. That subtle change from “could” to “shall” means that for eligible landowners, these specific water conservation agreements go from being voluntary to mandatory. This removes a degree of autonomy for landowners who might meet the criteria but prefer not to participate.

Furthermore, for these water agreements, the bill replaces the requirement to adopt “best management practices” with the need to follow a specific “conservation plan adopted with respect to” the land. While this sounds like a technicality, it means the conservation work must strictly adhere to a pre-approved plan rather than a general set of best practices. This could mean more rigorous oversight, but it also introduces a layer of bureaucracy that could slow down implementation.

Who Benefits from the Payment Limit Loophole?

Perhaps the most significant financial change is found in the final section: the bill exempts CREP rental payments from federal payment limitations. Typically, the government caps how much money any single farm operation can receive from various federal programs (Section 1234(g)). By carving out CREP rental payments from this limit, the bill opens the door for large landowners—who might already be hitting those caps through other programs—to receive potentially unlimited rental payments through their CREP contracts. For taxpayers, this means the overall cost of the CREP program could increase significantly, as the largest participants are no longer restricted by existing federal payment ceilings designed to ensure equitable distribution of funds.