(a) Actions causing violations. The following actions constitute violation of a contract by a participant:

1. (1) Knowingly or negligently damaging or causing BMP's to become impaired.
2. (2) Adopting a land use or practice during the contract period which tends to defeat the purposes of the program.
3. (3) Failing to comply with the terms of the contract.
4. (4) Filing a false claim.
5. (5) Misusing authorizations for payment.

(b) Contract termination as a result of violations.

1. (1) By signing a contract, the participant agrees to forfeit all rights to further cost-sharing payments under a contract and to refund all cost-share payments received, with interest, if the administering agency, with the concurrence of the State Conservationist, NRCS, determines that:

   1. (i) There was a violation of the contract during the time the participant had control of the land; and
   2. (ii) The violation was of such a nature as to warrant termination of the contract.
2. (2) The participant shall be obligated to refund all cost-share payments and all cost shares paid under authorizations, with interest, at the rates established by the Secretary of the Treasury pursuant to Pub. L. 92-41, 85 Stat. 97.

(c) Payment adjustments and refunds resulting from violations.

1. (1) By signing a contract, the participant agrees to refund cost-share payments received under the contract or to accept payment adjustments if the administering agency determines and the State Conservationist, NRCS, concurs that:

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