(a) Actions causing violation. The following actions constitute violation of a contract by a land user:

1. (1) Knowingly or negligently damaging or causing conservation treatment to be impaired.
2. (2) Adopting land use or treatment that tends to defeat the program purposes during the period of the contract.
3. (3) Failing to comply with the terms of the contract.
4. (4) Filing a false claim.
5. (5) Misusing an authorization.

(b) Effect of violation—(1) Contract to be terminated.

1. (i) By signing a contract, the land user agrees to forfeit all rights to further cost-share payments under a contract and to refund cost-share payments received not to exceed the difference between the estimated value of the land at time of entering into the contract and the value at time of termination, if the contracting officer, with approval of the State conservationist, determines that:

   1. (A) There was a violation of the contract during the time the land user had control of the land, and
   2. (B) The violation was of a nature as to warrant termination of the contract.
2. (ii) The land user is to be obligated to refund cost-share payments and cost shares paid under authorizations not to exceed the difference between the estimated value of the land at time of entering into the contract and the value at time of termination.

3. (2) Contract not terminated.

   1. (i) By signing a contract, the land user agrees to refund cost-share payments received under the contract or to accept payment adjustment if the contracting officer, with the approval of the State conservationist, determines that:

      1. (A) There was a violation of the contract during the time the land user had control of the land, and
      2. (B) The nature of the violation does not warrant termination of the contract.
   2. (ii) Payment adjustments may include decreasing the rate of a cost share, deleting a cost-share commitment from the contract, or withholding cost-share payments earned but not paid. The land user who signs the contract may be obligated to refund cost-share payments and cost shares paid under authorizations.