Deputy Secretary of Agriculture John R. Norton said yesterday he may resign because of conflict-of-interest rules that would prevent him from enrolling his large western farming operations in next year's federal crop-support programs.
Norton, who has been at the Agriculture Department less than a year, said that his family farm corporation in Arizona and California could lose as much as $1 million if it is barred from entering federal programs next year.
The deputy secretary said he had informed White House officials but that he had been advised to make no moves until the impact of new federal farm law on his operations could be studied.
"The White House is aware of the difficulties the new law causes me," he said. "The cost implications for our operations are heavy. I don't think they will find my services worth the flak that could result. I think they will find me expendable."
Norton, who came to Washington with strong Republican support, has been mentioned as a possible successor to Secretary John R. Block. Block has denied repeated rumors of an imminent departure.
Norton said that the slumping farm economy has caused big losses in his extensive wheat, cotton, vegetable and fruit operations this year. He said projections of further declines in the price of cotton, his principal crop, make the prospects bleak for a turnaround next year.
At his Senate confirmation hearings last spring, Norton pledged that none of his farming and ranch operations would take part in USDA programs during his tenure as the No. 2 official at the department.
But, Norton said in response to questions: "I can't live with that now . . . . It doesn't take any genius to figure out what the new farm legislation means to me. I was naive when I came here; I had no idea that Congress would turn out this kind of bill."
The farm bill signed Monday by President Reagan provides special price protections that would pay cotton farmers the difference between a congressionally set target and lower world market prices, with no limitation on the amount an individual could receive.
Congress, with urging from cotton lobbyists, agreed on the more generous approach to cushion farmers' income from the impacts expected when U.S. prices fall to the lower, more competitive world price. The open-ended benefits would be available to all U.S. cotton growers, large or small.
Under the previous law, Norton could have received crop support loans from the government, but his direct income support subsidy would have been limited to $50,000 per year. In any case, Norton's conflict-of-interest pledge prevented his enrollment in those programs.
Norton, a millionaire Republican promoted for his job by influential western growers who wanted more voice in USDA policy-making, said he was "chagrined" and "embarrassed" that he might have to leave the administration after less than a year.
"The rules are severe," he said. "Production agriculture is precluded from these policy jobs. You ought to be able to participate in these broad national programs as long as you don't make special policy decisions. The rules mean that the only ones who can come in are the Earl Butzes and the Bob Berglands."
Butz, a former Purdue professor and agribusiness adviser, was secretary of agriculture during the Nixon-Ford years; Bergland, a former farmer and congressman, was secretary under President Jimmy Carter.
But Norton's boss, Block, the first fulltime farmer to hold the top spot at USDA in decades, pledged that his Illinois corn, soybean and hog operations would not be enrolled in federal farm programs during his tour in Washington.
Under the Ethics in Government Act of 1978, presidential appointees such as Block and Norton must avoid conflicts between their private businesses and the government programs they administer. The Office of Government Ethics, which oversees the act, last March approved Norton's business divestiture and conflict-avoidance plans.
The same conflict-of-interest rules, however, do not apply to lower-level political appointees. Other USDA subcabinet-level officials were allowed to retain their interest in family farm concerns involved in federal programs while lobbying on the agricultural legislation.
Norton's recusal pledge last spring included resignation from management roles in his farming and ranching operations. He was, however, allowed to take part in general policy decisions as long as they did not directly affect any of his private businesses.
His participation in the recent congressional farm-bill deliberations as the administration's chief representative on cotton and rice drew some criticism from lobbyists who indirectly raised the conflict-of-interest issue. Norton said he was not assigned to that role until after both the House and Senate had adopted the basic provisions of the cotton and rice programs.
Norton's nomination last spring raised some eyebrows after it was learned that he and farming firms in which he had an interest received free cotton and wheat worth about $3.5 million from the administration's 1983 payment-in-kind (PIK) program to reduce surpluses.
Norton parried potential criticism at his confirmation hearing by saying, "Had I not participated in the PIK program, members of this committee might well be questioning my management ability."