73 FR 79273, Dec. 29, 2008, unless otherwise noted.
(a) This part, except as otherwise noted, is applicable to all of the following programs and any other programs as specified in individual program regulations of this chapter:
(1) The Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) Programs, part 1412 of this chapter;
(2) The Price Support programs in parts 1421, 1427, and 1434 of this chapter;
(3) The Conservation Reserve Program (CRP), part 1410 of this chapter;
(4) The Noninsured Crop Disaster Assistance Program (NAP), part 1437 of this chapter;
(5) The Livestock Forage Disaster Program (LFP), Livestock Indemnity Program (LIP), and the Emergency Assistance for Livestock, Honey Bees and Farm-raised Fish Program (ELAP), part 1416 of this chapter;
(6) The Tree Assistance Program (TAP), part 1416 of this chapter;
(7) The Natural Resources Conservation Service (NRCS) conservation programs of this title including the Agricultural Management Assistance (AMA) program, Conservation Stewardship Program (CSP), Environmental Quality Incentives Program (EQIP), and Agricultural Conservation Easement Program (ACEP); and
(8) The Emergency Conservation Program (ECP) and Emergency Forest Restoration Program (EFRP) in part 701 of this title.
(9) Subparts C and G of this part do not apply to the programs listed in paragraphs (a)(3) through (8) of this section.
(b) This part will apply to the programs specified in:
(1) Paragraphs (a)(1), (2), (4), and (7) of this section on a crop year basis;
(2) Paragraph (a)(3) of this section on a fiscal year basis;
(3) Paragraphs (a)(5) and (6) of this section on a calendar year basis;
(4) Paragraph (a)(7) of this section when funding is available; and
(5) Paragraph (a)(8) of this section on a per disaster event basis.
(c) This part will be used to determine the manner in which payments will be attributed to persons and legal entities for the payment limitations provided in this section and to other programs as specified in individual program regulations in this chapter.
(d) Where more than one provision of this part may apply, the provision that is most restrictive on the program participant will be applied.
(e) The payment limitations of this part are not applicable to:
(1) Payments made under State conservation reserve enhancement program agreements approved by the Secretary, and
(2) Payments made subject to this part if ownership interest in land or a commodity is transferred as the result of the death of a program participant and the new owner of the land or commodity has succeeded to the contract of the prior owner. If the successor is otherwise eligible, payments cannot exceed the amount the previous owner was entitled to receive at the time of death.
(f) The following amounts are the limitations on payments per person or legal entity for the applicable period for each payment or benefit.
Table 1 to Paragraph (f)
| Payment or benefit | Limitation per person or legal entity
($) |
|---|---|
| (1) Price Loss Coverage, Agriculture Risk Coverage payments (other than Peanuts) | 125,000 per program year. |
| (2) Price Loss Coverage and Agriculture Risk Coverage payments for Peanuts | 125,000 per program year. |
| (3) CRP annual rental payments | 50,000 per program year. |
| (4) NAP payments | |
| (i) basic 50/55 NAP coverage | 125,000 per crop year. |
| (ii) Buy-up NAP coverage | 300,000 per crop year. |
| (5) LFP | 125,000 per program year. |
| (6) CSP1 | 200,000. |
| (7) EQIP2 | 450,000. |
| (8) AMA program | 50,000 per fiscal year. |
| (9) ECP | 500,000 per disaster event. |
| (10) EFRP | 500,000 per disaster event. |
[79 FR 21096, Apr. 14, 2014, as amended at 80 FR 119, Jan. 2, 2015; 80 FR 78128, Dec. 16, 2015; 83 FR 49463, Oct. 2, 2018; 85 FR 52036, Aug. 24, 2020]
(a) The regulations in this part will be administered under the general supervision and direction of the Executive Vice President, Commodity Credit Corporation (CCC), and the Administrator, Farm Service Agency (FSA). In the field, the regulations in this part will be administered by the FSA State and county committees (referred to as “State committee” and “county committee,” respectively).
(b) State executive directors, county executive directors, and State and county committees do not have authority to modify or waive any of the provisions of this part.
(c) The State committee may take any action authorized or required by this part to be taken by the county committee that has not been taken by the county committee. The State committee may also:
(1) Correct or require a county committee to correct any action taken by the county committee that is not in accordance with this part or
(2) Require a county committee to withhold taking any action that is not in accordance with this part.
(d) No delegation in this part to a State or county committee precludes the Executive Vice President, CCC, and the Administrator, FSA, or a designee, from determining any question arising under this part or from reversing or modifying any determination made by a State or county committee.
(e) Benefits from programs subject to this part may not be issued until all required forms and necessary payment eligibility and payment limitation determinations are made.
(f) The initial payment eligibility determinations will be made within 60 days after the required forms and any other supporting documentation needed in making the determinations are received in the county FSA office. If the determination is not made within 60 days, the producer will receive a determination for that program year that reflects the determination sought by the producer unless the Deputy Administrator determines that the producer did not follow the farm operating plan that was presented to the county or State committee for the applicable year.
(g) Initial determinations concerning the provisions of this part will be made by the FSA State office with respect to any farm operating plan that is for a joint operation with six or more members.
(h) Reviews of farming operations and corresponding documentation submitted by program participants may be conducted at any time to determine compliance with applicable statutes and regulations. The completion of the reviews is not subject to the time constraints specified in paragraph (f) of this section.
(i) The Deputy Administrator will periodically monitor the status of completion of assigned compliance reviews and take any actions deemed appropriate to ensure timely completion of reviews for payment eligibility and payment limitation compliance purposes.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 80 FR 78128, Dec. 16, 2015; 85 FR 52036, Aug. 24, 2020]
(a) The terms defined in part 718 of this title are applicable to this part and all documents issued in accordance with this part, except as otherwise provided in this section.
(b) The following definitions are also applicable to this part:
Active personal management means personally providing and participating in activities considered critical to the profitability of the farming operation and performed under one or more of the following categories:
(1) Capital, which includes:
(i) Arranging financing and managing capital;
(ii) Acquiring equipment;
(iii) Acquiring land or negotiating leases;
(iv) Managing insurance; and
(v) Managing participation in USDA programs;
(2) Labor, which includes hiring and managing of hired labor; and
(3) Agronomics and marketing, which includes:
(i) Selecting crops and making planting decisions;
(ii) Acquiring and purchasing crop inputs;
(iii) Managing crops (that is, whatever managerial decisions are needed with respect to keeping the growing crops living and healthy—soil fertility and fertilization, weed control, insect control, irrigation if applicable) and making harvest decisions; and
(iv) Pricing and marketing of crop production.
Administrator means the Administrator of the Farm Service Agency including any designee of the Administrator.
Alien means any person not a citizen or national of the United States.
Attribution means the combination of any payment made directly to a person or legal entity with the person's or legal entity's pro rata direct and indirect interest in payments received by a legal entity, joint venture, or general partnership.
Average Adjusted Gross Income means the average of the adjusted gross income as defined under 26 U.S.C. 62 or comparable measure of the person or legal entity over the 3 taxable years preceding the most immediately preceding complete taxable year.
Capital means the funding provided by a person or legal entity to the farming operation for the operation to conduct farming activities. In determining whether a person or legal entity has independently contributed capital, in the form of funding, to the farming operation, the capital must have been derived from a fund or account separate and distinct from that of any other person or legal entity with an interest in the farming operation. Capital does not include the value of any labor or management that is contributed to the farming operation or any outlays for land or equipment. A capital contribution must be a direct out-of-pocket input of a specified sum or an amount borrowed by the person or legal entity and does not include advance program payments.
Chief means the Chief of the Natural Resources Conservation Service including any designee of the Chief (also referred to in this part as NRCS Chief).
Contribution means providing land, capital, or equipment assets, and the actions of providing active personal labor or active personal management to a farming operation in exchange for, or with the expectation of, deriving benefit based solely on the success of the farming operation.
Deputy Administrator means the Deputy Administrator for Farm Programs, Farm Service Agency including any designee.
Environmentally sensitive land of special significance means land offered for enrollment or adjacent to the land offered for enrollment that contains, or through enrollment will address, critical resources including, but not limited to:
(1) Habitat for threatened, endangered, or at-risk species;
(2) Historical or cultural resources;
(3) Native grasslands;
(4) Unique wetlands;
(5) Rare, unique, or related soils; and
(6) Critical groundwater recharge areas.
Equipment means the machinery and implements needed by the farming operation to conduct activities of the farming operation, including machinery and implements involved in land preparation, planting, cultivating, harvesting, or marketing of the crops involved. Equipment also includes machinery and implements needed to establish and maintain conserving cover crops on CRP acreages and those needed to conduct livestock operations. The equipment may be leased from any source. If the equipment is leased from another person or legal entity with an interest in the farming operation, the equipment must be leased at a fair market value.
Family member means a person to whom another member in the farming operation is related as a lineal ancestor, lineal descendant, sibling, first cousin, niece, nephew, spouse, or otherwise by marriage.
Farming operation means a business enterprise engaged in the production of agricultural products, commodities, or livestock, operated by a person, legal entity, or joint operation that is eligible to receive payments, directly or indirectly, under one or more of the programs specified in § 1400.1. A person or legal entity may have more than one farming operation if the person or legal entity is a member of one or more joint operations.
Indian tribe means any Indian tribe, band, nation, pueblo, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601-1629h), which is recognized as eligible for special programs and services provided by the United States to Indians because of their status as Indians.
Interest in the farming operation means any of the following:
(1) Owner, lessor, or lessee of the land in the farming operation;
(2) An interest in the agricultural products, commodities, or livestock produced by the farming operation; or
(3) A member of a joint operation that is an owner, lessor, or lessee of the land in the farming operation or has an interest in the agricultural products, commodities, or livestock produced by the farming operation.
Irrevocable trust means a trust as specified in this definition. Any trust not meeting this definition will be considered a revocable trust. A trust may be considered to be an irrevocable trust only if:
(1) The trust cannot be modified or terminated by the grantor;
(2) The grantor has no future, contingent, or remainder interest in the corpus of the trust; and
(3) The trust agreement does not provide for the transfer of the corpus of the trust to the remainder beneficiary in less than 20 years from the date the trust is established except in cases where the transfer is contingent upon either the remainder beneficiary achieving at least the age of majority or the death of the grantor or income beneficiary.
Joint operation means a general partnership, joint venture, or other similar business organization in which the members are jointly and severally liable for the obligations of the organization.
Land means farmland that meets the specific requirements of the applicable program. The land may be leased from any source. If the land is leased from another person or legal entity with an interest in the farming operation, the land must be leased at a fair market value.
Lawful alien means any person who is not a citizen or national of the United States but who is admitted into the United States for permanent residence under the Immigration and Nationality Act and possesses appropriate valid credentials issued by the United States Citizenship and Immigration Services, Department of Homeland Security.
Legal entity means an entity created under Federal or State law and that:
(1) Owns land or an agricultural commodity, product, or livestock; or
(2) Produces an agricultural commodity, product, or livestock.
Livestock means those animals included in § 1416.304(a) of this chapter.
Payment means:
(1) Payments made in accordance with part 1412 of this chapter or successor regulation of this chapter;
(2) CRP annual rental payments made in accordance with part 1410 of this chapter or successor regulation of this chapter;
(3) NAP payments made in accordance with part 1437 of this chapter or successor regulation of this chapter;
(4) ELAP, LIP, LFP, and TAP payments made in accordance with part 1416 of this chapter or successor regulations of this chapter:
(5) Price support payments made in accordance with parts 1421 and 1434 of this chapter; and
(6) For other programs, any payments designated in individual program regulations in this chapter.
Person means an individual, natural person and does not include a legal entity.
Public school means a primary, elementary, secondary school, college, or university that is directly administered under the authority of a governmental body or that receives a predominant amount of its financing from public funds.
Secretary means the Secretary of the United States Department of Agriculture.
Significant contribution means the provision of the following to a farming operation:
(i)
(A) For land, capital, or equipment contributed independently by a person or legal entity, a contribution that has a value at least equal to 50 percent of the person's or legal entity's commensurate share of the total:
(1) Value of the capital necessary to conduct the farming operation;
(2) Rental value of the land necessary to conduct the farming operation; or
(3) Rental value of the equipment necessary to conduct the farming operation; or
(B) If the contribution by a person or legal entity consists of any combination of land, capital, and equipment, such combined contribution must have a value at least equal to 30 percent of the person's or legal entity's commensurate share of the total value of the farming operation;
(ii) For active personal labor, an amount contributed by a person to the farming operation that is described by the smaller of the following:
(A) 1,000 hours per calendar year; or
(B) 50 percent of the total hours that would be necessary to conduct a farming operation that is comparable in size to such person's or legal entity's commensurate share in the farming operation;
(iii) With respect to active personal management, activities that are critical to the profitability of the farming operation, taking into consideration the person's or legal entity's commensurate share in the farming operation; and
(iv) With respect to a combination of active personal labor and active personal management, when neither contribution by itself meets the requirement of paragraphs (ii) and (iii) of this definition, a combination of active personal labor and active personal management that, when made together, results in a critical impact on the profitability of the farming operation in an amount at least equal to either the significant contribution of active personal labor or active personal management as defined in paragraphs (ii) and (iii) of this definition.
Substantial amount of active personal labor means the provision of active personal labor to a farming operation in an amount described by the smaller of the following:
(1) 1,000 hours per calendar year; or
(2) 50 percent of the total hours that would be necessary to conduct a farming operation that is comparable in size to the person's or legal entity's commensurate share in the farming operation.
Total value of the farming operation means the total of the costs, excluding the value of active personal labor and active personal management contributed by a person who is a member of the farming operation, needed to carry out the farming operation for the year for which the determination is made.
[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 85 FR 52037, Aug. 24, 2020; 85 FR 73602, Nov. 19, 2020]
Provisions of this part do not apply to Indian tribes as defined in § 1400.3.
(a) All or any part of a payment otherwise due a person or legal entity on all farms in which the person or legal entity has an interest may be withheld or be required to be refunded if the person or legal entity fails to comply with the provisions of this part.
(b) All or any part of a payment otherwise due a person or legal entity on all farms in which the person or legal entity has an interest may be withheld or be required to be refunded if the person or legal entity fails to comply with the provisions of this part and adopts or participates in adopting a scheme or device designed to evade this part, or that has the effect of evading this part. Examples of acts may include, but are not limited to:
(1) Concealing information that affects the application of this part;
(2) Submitting false or erroneous information; or
(3) Creating a business arrangement using rental agreements and other arrangements to conceal the interest of a person or legal entity in a farm or farming operation for the purpose of obtaining program payments the person or legal entity would otherwise not be eligible to receive. Examples of business arrangements or acts include, but are not limited to the following:
(i) No crops are grown or agricultural commodities produced by the represented operation;
(ii) The represented operation has no appreciable assets;
(iii) The only source of capital for the operation is the program payments; or
(iv) The represented operation exists only for the receipt of program payments.
(c) If the Deputy Administrator determines that a person or legal entity has adopted a scheme or device to evade, or that has the purpose of evading, the provisions of 7 U.S.C. 1308, 1308-1, or 1308-3, as amended, the person or legal entity will be ineligible to receive payments under the programs specified in § 1400.1 in the year the scheme or device was perpetrated or adopted and the succeeding year.
(d) A person or legal entity that lies or perpetuates fraud, commits fraud, or participates in equally serious actions for the benefit of the person or legal entity, or the benefit of any other person or legal entity, to exceed the applicable limit on payments or the requirements of this part will be subject to a 5-year denial of all program benefits. Examples of equally serious actions include, but are not limited to:
(1) Knowingly engaged in, or aided in the creation of a fraudulent document;
(2) Failed to disclose material information relevant to the administration of the provisions of this part, or
(3) Any other actions of a person or legal entity determined by the Deputy Administrator as designed or intended to circumvent the provisions of this subpart.
(e) Program payments and benefits will be denied on pro-rata basis:
(1) In accordance to the interest held by the person or legal entity in any other legal entity or joint operations and
(2) To any person or legal entity that is a cash rent tenant on land owned or under control of a person or legal entity for which a determination of this section has been made.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]
(a) Any legal entity, including joint operations, and any member of a legal entity determined to have knowingly participated in a scheme or device, or other equally serious actions to evade the payment limitation provisions in this part, or that has the purpose of evading the provisions of this part, will be jointly and severally liable for any amounts determined to be payable as the result of the scheme or device, or other examples of equally serious actions mentioned in this section or in § 1400.5, including amounts necessary to recover the payments.
(b) Any person or legal entity that cooperates in the enforcement of the payment limitation and payment eligibility provisions of this part may be partially or fully released from liability, as determined by the Executive Vice President, CCC.
(c) The provisions of this section will be applicable in addition to any liability that arises under a criminal or civil statute.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 FR 52038, Aug. 24, 2020]
A revocable trust and the grantor will be considered to be the same person under this part.
[85 FR 52038, Aug. 24, 2020]
(a) Actions taken by a person or legal entity in good faith based on action or advice of an authorized representative of the Administrator may be accepted as meeting the requirements of this part to the extent the Administrator deems necessary to provide fair and equitable treatment to the person or legal entity.
(b) Actions taken by a person or legal entity in good faith based on action or advice of an authorized representative of the NRCS Chief may be accepted as meeting the requirements of this part to the extent the NRCS Chief deems necessary to provide fair and equitable treatment to the person or legal entity.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]
(a) A person or legal entity may obtain reconsideration and review of determinations made under this part in accordance with the appeal regulations set forth in part 780 of this title. With respect to the appeals, the applicable reviewing authority will:
(1) Schedule a hearing with respect to the appeal within 45 days following receipt of the written appeal and
(2) Issue a determination within 60 days following the hearing.
(b) The time limitations provided in paragraph (a) will not apply if:
(1) The appellant, or the appellant's representative, requests a postponement of the scheduled hearing;
(2) The appellant, or the appellant's representative, requests additional time following the hearing to present additional information or a written closing statement;
(3) The appellant has not timely presented information to the reviewing authority; or
(4) An investigation by the Office of Inspector General is ongoing or a court proceeding is involved that affects the amount of payments a person may receive.
(c) If the deadlines provided in paragraphs (a) and (b) of this section are not met, the relief sought by the producer's appeal will be granted for the applicable crop year unless the Deputy Administrator determines that the producer did not follow the farm operating plan initially presented to the county committee for the year that is the subject of the appeal.
(d) An appellant may waive the provisions of paragraphs (a) and (b) of this section.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]
(a) Except as provided in paragraph (b) of this section, payments received by a child under 18 years of age as of June 1 of the applicable crop, program, or fiscal year, including the person who is the beneficiary of a trust or who is an heir of an estate, will be attributed for the entire crop, program, or fiscal year to the parent receiving the greater amount of program payments subject to this part or to any court-appointed person such as a guardian or conservator who is responsible for the minor.
(b) Payments received by a minor will not be attributed to the minor's parent or to any court-appointed person such as a guardian or conservator who is responsible for the minor if all of the following apply:
(1) The minor is a producer on a farm and the minor's parents or any court-appointed person such as guardian or conservator who is responsible for the minor, does not have any interest in the farm;
(2) The minor has established and maintains a separate household from the minor's parents or any court-appointed person such as a guardian or conservator who is responsible for the minor, and the minor personally carries out the farming activities with respect to the minor's farming operation for which there is a separate accounting; and
(3) The minor does not live in the same household as the minor's parents and:
(i) Is represented by a court-appointed guardian or conservator who is responsible for the minor and
(ii) Ownership of the farm is vested in the minor.
(c) A person will be considered to be a minor until the age 18 is reached. Court proceedings conferring majority on a person under 18 years of age will not change the person's status as a minor.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 FR 52038, Aug. 24, 2020]
(a) A State, political subdivision, and agency thereof, is not eligible for payments or benefits under programs specified in § 1400.1, unless the exception provided in paragraph (b) of this section applies.
(b) Subject to the limitation in paragraph (c) of this section, a State, political subdivision, and any agency thereof, may receive payments or benefits under programs specified in § 1400.1(a)(1) if both of the following apply:
(1) The land for which payments are received is owned by the State, political subdivision, or agency thereof and
(2) The payments are used solely for the support of public schools;
(c) The total payments described in paragraph (b) of this section cannot exceed $500,000 annually except for States with a population less than 1,500,000, as established by the most recent U.S. Census Bureau annual estimate of the State's resident population.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 FR 52038, Aug. 24, 2020]
(a) A charitable organization, including a club, society, fraternal organization, or religious organization will be considered a separate legal entity for payment limitation purposes to the extent that the entity is independently engaged in the production of crops, agricultural commodities, or livestock, except where the land or the proceeds from the farming operation may transfer to a legal entity that exercises control or authority over the organization.
(b) If the land or the proceeds from the farming operation may transfer to a legal entity that exercises control or authority over the charitable organization, payments to the charitable organization will be attributed to the parent organization.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]
(a) Any change in a farming operation that would increase the number of persons to which the provisions of this part apply must be bona fide and substantive. If bona fide, the following will be considered to be a substantive change in the farming operation:
(1) The addition of a family member to a farming operation in accordance with § 1400.208, except that the addition will not affect the status of any other person or legal entity that is added to the farming operation; or
(2) With respect to a landowner only, a change from a cash rent to a share rent; or
(3) An increase through the acquisition of land used for agricultural production not previously involved in the farming operation of at least 20 percent or more in the total land involved in the farming operation.
(i) For the purpose of payment limitations, the increase in agricultural land will be considered an applicable bona fide and substantive change for the increase of only one person or legal entity to the farming operation, unless;
(ii) A representative of the State FSA office determines, based on the magnitude and complexity of the change represented, the increase in agricultural land supports additional persons or legal entities to the farming operation; or
(4) A change in ownership by sale or gift of equipment from a person or legal entity previously engaged in a farming operation to a person or legal entity that has not been involved in the operation. The sale or gift of equipment will be considered to be bona fide and substantive only if:
(i) The transferred amount of the equipment is commensurate with the new person's or legal entity's share of the farming operation;
(ii) The sale or gift of the equipment was based on the equipment's fair market value;
(iii) The former owner of the equipment has no direct or indirect control over the equipment;
(iv) The transaction was not financed by the former owner; and
(v) Preference was not given to the former owner to re-purchase the equipment at a later date; or
(5) A change in ownership by sale or gift of land or livestock from a person or legal entity who previously has been engaged in a farming operation to a person or legal entity that has not been involved in the operation. The sale or gift of land or livestock will be considered to be bona fide and substantive only if:
(i) The transferred amount of the land or livestock is commensurate with the new person's or legal entity's share of the farming operation;
(ii) The sale or gift of land or livestock was based on land's or livestock's fair market value;
(iii) The former owner of the land or livestock has no direct or indirect control over the land or livestock;
(iv) The transaction was not financed by the former owner; and
(v) Preference was not given to the former owner to re-purchase the land or livestock at a later date.
(b) Unless the requirements in paragraph (a) of this section are met, the increase in persons in the farming operation will not be recognized for payment limitation purposes and the additional persons or legal entities are not eligible for program payment identified in § 1400.1 otherwise resulting from the farming operation.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 899, Jan. 7, 2010; 85 FR 52038, Aug. 24, 2020]
(a) A payment made directly to a person or legal entity will be combined with the pro rata interest of the person or legal entity in payments received by a legal entity in which the person or legal entity has a direct or indirect ownership interest, unless the payments of the legal entity have been reduced by the pro rata share of the person or legal entity.
(b) A payment made to a legal entity will be attributed to those persons who have a direct and indirect ownership interest in the legal entity, unless the payment of the legal entity has been reduced by the pro rata share of the person.
(c) Attribution of payments made to legal entities will be tracked through four levels of ownership in legal entities as follows:
(1) First level of ownership—any payment made to a legal entity that is owned in whole or in part by a person will be attributed to the person in an amount that represents the direct ownership interest in the first-tier or payment legal entity;
(2)
(i) Second level of ownership—any payment made to a first-tier legal entity that is owned in whole or in part by another legal entity (referred to as a second-tier legal entity) will be attributed to the second-tier legal entity in proportion to the ownership of the second-tier legal entity in the first-tier legal entity;
(ii) If the second-tier legal entity is owned in whole or in part by a person, the amount of the payment made to the first-tier legal entity will be attributed to the person in the amount that represents the indirect ownership in the first-tier legal entity by the person.
(3) Third and fourth levels—except as provided in paragraph (2)(ii) of this section, any payments made to a legal entity at the third and fourth tiers of ownership will be attributed in the same manner as specified in paragraph (2)(i) of this section.
(4) Fourth-tier ownership—if the fourth-tier of ownership is that of a legal entity and not that of a person, a reduction in payment will be applied to the first-tier or payment legal entity in the amount that represents the indirect ownership in the first-tier or payment legal entity by the fourth-tier legal entity.
(d) For purposes of administering direct attribution, and to determine a person's ownership interest in a legal entity that receives a payment subject to limitation; the ownership interest on June 1 of each year will be used.
(1) If the change in ownership interest is due to the death of an interest holder in the legal entity or the legal entity did not exist on June 1 of the applicable year, the Deputy Administrator may determine that a change after June 1 is considered relevant or effective for the current year.
(2) Changes that occur after June 1 cannot be used to increase the amount of program payments a legal entity, or its members, is eligible to receive directly or indirectly for the applicable year.
(e) Direct attribution of payments is not applicable to a cooperative association of producers with respect to commodities produced by the members of the association that are marketed by the association on behalf of the members of the association. The payments will instead be attributed to the producers as persons.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
(a) Direct or indirect payments made to a person or legal entity will not exceed the amounts specified in subpart A of this part and will be determined in accordance with § 1400.105.
(b) Payments made to a joint operation cannot exceed, for each payment specified in subpart A of this part, the amount determined by multiplying the maximum payment amount specified in subpart A of this part by the number of persons and legal entities, other than joint operations, that comprise the ownership of the joint operation.
(c) Payments made to a legal entity will be reduced proportionately by an amount that represents the direct or indirect ownership in the legal entity by any person or legal entity that has otherwise reached the applicable maximum payment limitation.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
(a) In order to be eligible to receive any payment specified in subpart A of this part, or any other program as provided in individual program regulations in this chapter, a person or legal entity must, provide information in the manner as prescribed by the Deputy Administrator.
(b) The information required to be submitted under paragraph (a) of this section must include:
(1) The name and social security number of each person, or the name and taxpayer identification number of each legal entity, that holds or acquires an ownership interest in the legal entity and
(2) The name and taxpayer identification number of each legal entity in which the person or legal entity holds an ownership interest.
(a) To be considered eligible to receive payments with respect to a particular farming operation, a person or legal entity must be actively engaged in farming with respect to the operation.
(b) Actively engaged in farming means, except as otherwise provided in this part, that the person or legal entity:
(1) Independently and separately makes a significant contribution to a farming operation of:
(i) Capital, equipment, or land, or a combination of capital, equipment, or land and
(ii) Active personal labor or active personal management, or a combination of active personal labor and active personal management;
(2) Has a share of the profits or losses from the farming operation commensurate with the person's or legal entity's contributions to the operation; and
(3) Makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the person's or legal entity's claimed share of the farming operation.
(c) All of the following factors will be taken into consideration in determining if the person or legal entity is independently and separately contributing a significant amount of capital, equipment, or land, or a combination of capital, equipment, or land, to the farming operation:
(1) A separate and distinct interest in the land, crop, and livestock involved in the farming operation;
(2) The demonstration of separate and total responsibility for the interest in the land, crop, and livestock in the farming operation; and
(3) All funds and business accounts of the farming operation are separate from that of any other person and legal entity.
(d) In determining if the person or legal entity is independently and separately contributing a significant amount of active personal labor or active personal management, all of the following factors will be taken into consideration:
(1) The types of crops and livestock produced by the farming operation;
(2) The normal and customary farming practices of the area;
(3) The total amount of labor and management necessary for the farming operation in the area; and
(4) Whether the person or legal entity receives compensation for the labor and management activities.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
(a) A person will be considered to be actively engaged in farming with respect to a farming operation if:
(1) The person independently and separately makes a significant contribution to a farming operation of:
(i) Capital, equipment, or land, or a combination of capital, equipment, or land and
(ii) Active personal labor or active personal management, or a combination of active personal labor and active personal management;
(2) Has a share of the profits or losses from the farming operation commensurate with the person's or legal entity's contributions to the operation; and
(3) Makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the person's or legal entity's claimed share of the farming operation.
(b) If one spouse, or an estate of a deceased spouse, is determined to be actively engaged in farming as specified in paragraph (a) of this section, the other spouse is considered to have made a significant contribution, as specified in paragraph (a)(1)(ii) of this section, only to the same farming operation.
(c) If a farming operation is conducted by a person, and the capital, land, or equipment is contributed by the person, the capital, land, or equipment:
(1) To meet the requirements of paragraph (a)(1)(i) of this section, must be contributed directly by the person and must not be acquired as a result of a loan made to, guaranteed, co-signed, or secured by any other person, joint operation, or legal entity that has an interest in the farming operation; and
(2) To meet the requirements of paragraphs (a)(2) and (a)(3) of this section, and if acquired as a loan made to, guaranteed, co-signed, or secured by the persons, joint operations, or legal entities, the loan must:
(i) Bear the prevailing interest rate and
(ii) Have a repayment schedule considered reasonable and customary for the area.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
(a) A member of a joint operation will be considered to be actively engaged in farming with respect to a farming operation if the member:
(1) Makes a significant contribution of:
(i) Capital, equipment, or land or a combination of capital, equipment, or land and
(ii) Active personal labor or active personal management, or a combination of active personal labor and active personal management, and that are:
(A) Performed on a regular basis,
(B) Identifiable and documentable, and
(C) Separate and distinct from the contributions of any other member of the farming operation;
(2) Has a share of the profits or losses from the farming operation commensurate with the member's contributions to the operation; and
(3) Makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the member's claimed share of the farming operation.
(b) For a farming operation conducted by a joint operation in which the capital, land, or equipment is contributed by the joint operation, the capital, land, or equipment:
(1) To meet the requirements of paragraph (a)(1)(i) of this section, and if contributed directly by the joint operation, must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or other joint operation that has an interest in the farming operation; and
(2) To meet the requirements of paragraphs (a)(2) and (3) of this section, and if acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or joint operations with an interest in the operation, the loan must:
(i) Bear the prevailing interest rate and
(ii) Have a repayment schedule considered reasonable and customary for the area.
(c) If a joint operation separately makes a significant contribution of capital, equipment, or land, or a combination of capital, equipment, or land, and the joint operation meets the provisions of § 1400.201(b)(2) and (3), the members of the joint operation who make a significant contribution of active personal labor, active personal management, or a combination of active personal labor and active personal management to the farming operation as specified in paragraph (a)(1)(ii) of this section will be considered to be actively engaged in farming with respect to the farming operation.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
(a) A limited partnership, limited liability partnership, limited liability company, corporation, or other similar legal entity will be considered to be actively engaged in farming with respect to a farming operation if:
(1) The legal entity independently and separately makes a significant contribution to the farming operation of capital, equipment, or land, or a combination of capital, equipment, or land;
(2) Each partner, stockholder, or member with an ownership interest or their spouse with an ownership interest makes a contribution, whether compensated or not compensated, of active personal labor, active personal management, or a combination of active personal labor and active personal management to the farming operation; that are:
(i) Performed on a regular basis;
(ii) Identifiable and documentable; and
(iii) Separate and distinct from the contributions of any other partner, stockholder or member of the farming operation;
(3) The collective contribution of the partners, stockholders and members is significant and commensurate;
(4) The legal entity has a share of the profits or losses from the farming operation commensurate with the legal entity's contributions to the operation; and
(5) The legal entity makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the legal entity's claimed share of the farming operation.
(b) If any partner, stockholder, or member fails to meet the requirements in paragraph (a)(2) of this section, any program payment and benefit subject to this subpart provided to the legal entity will be reduced by an amount commensurate with the ownership share held by that partner, stockholder, or member in the legal entity.
(c) An exception to paragraph (b) of this section will apply if:
(1) At least 50 percent of the stock is held by partners, stockholders, or members that are actively providing labor or management and
(2) The partners, stockholders, or members are collectively receiving, directly or indirectly, total payments equal to or less than one payment limitation.
(d) For a farming operation conducted by a legal entity in which the capital, land, or equipment is contributed by the legal entity, the capital, land, or equipment:
(1) To meet the requirements of paragraph (a)(1) of this section, must be contributed directly by the legal entity and must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or joint operation that has an interest in the farming operation, as defined in this part; and
(2) To meet the requirements of paragraphs (a)(4) and (a)(5) of this section, and if acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or joint operations as defined, the loan must:
(i) Bear the prevailing interest rate and
(ii) Have a repayment schedule considered reasonable and customary for the area.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
A trust will be considered to be actively engaged in farming with respect to a farming operation if:
(a) The trust independently and separately makes a significant contribution to the farming operation of capital, equipment, or land, or a combination of capital, equipment, or land;
(b) The income beneficiaries collectively make a significant contribution of active personal labor or active personal management, or a combination of active personal labor and active personal management to the farming operation. The combined interest of all the income beneficiaries providing active personal labor or active personal management, or a combination of active personal labor and active personal management, must be at least 50 percent;
(c) The trust has a share of the profits or losses from the farming operation commensurate with the legal entity's contributions to the operation;
(d) The trust makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the legal entity's claimed share of the farming operation;
(e) For a farming operation conducted by a trust in which the capital, land, or equipment is contributed by the trust, the capital, land, or equipment:
(1) To meet the requirements of paragraph (a) of this section, must be contributed directly by the trust and must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or joint operation that has an interest in the farming operation, as defined in this part; and
(2) To meet the requirements of paragraphs (c) and (d) of this section and if land, capital or equipment is acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or joint operations as defined, the loan must:
(i) Bear the prevailing interest rate; and
(ii) Have a repayment schedule considered reasonable and customary for the area.
(f) The trust has provided a tax identification number of the trust unless the trust is a revocable trust and the grantor is the sole income beneficiary; and
(g) The trust has provided a copy of the trust agreement to the county committee unless the trust is a revocable trust.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
(a) For 2 program years after the program year in which a person dies, the person's estate will be considered to be actively engaged in farming if:
(1) The estate, as a legal entity, makes a significant contribution of either:
(i) Capital, equipment, or land or
(ii) A combination of capital, equipment, or land; and
(2) The personal representative or heirs of the estate collectively make a significant contribution of either:
(i) Active personal labor or active personal management or
(ii) The combination of active personal labor and active personal management; and
(3) The estate has a share of the profits or losses from the farming operation commensurate with the legal entity's contributions to the operation;
(4) The estate makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the legal entity's claimed share of the farming operation; and
(5) The representative of the estate has provided a tax identification number for the estate and a copy of a court order, will, or other legal document that identifies the heir(s) and tax identification number(s) of the heir(s).
(b) For a farming operation conducted by an estate in which the capital, land, or equipment is contributed by the estate, the capital, land, or equipment:
(1) To meet the requirements of paragraph (a) of this section, must be contributed directly by the estate and must not be acquired as a loan made to, guaranteed, co-signed, or secured by any person, legal entity, or joint operation that has an interest in the farming operation, as defined in this part; and
(2) To meet the requirements of paragraphs (c)(3)and (a)(4) of this section, and if land, capital or equipment is acquired as a result of a loan made to, guaranteed, co-signed, or secured by the persons, legal entities, or joint operations as defined, the loan must:
(i) Bear the prevailing interest rate; and
(ii) Have a repayment schedule considered reasonable and customary for the area.
(c) After the period set forth in paragraph (a) of this section, the deceased person's estate will not be considered to be actively engaged in farming unless, on a case by case basis, the Deputy Administrator determines, for the purpose of obtaining program payments, that the estate has not been settled.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 900, Jan. 7, 2010; 85 FR 52039, Aug. 24, 2020]
(a) A person or legal entity that is a landowner, including landowners with an undivided interest in land, making a significant contribution of owned land to the farming operation, will be considered to be actively engaged in farming with respect to the owned land, if the landowner:
(1) Receives rent or income for the use of the land based on the land's production or the operation's operating results;
(2) Has a share of the profits or losses from the farming operation commensurate with the landowner's contributions to the operation; and
(3) Makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the landowner's claimed share of the farming operation.
(b) A landowner also includes a member of a joint operation if the joint operation holds title to land in the name of the joint operation and if the joint operation or its members submit adequate documentation to determine that, upon dissolution of the joint operation, the title to the land owned by the joint operation will revert to the member of the joint operation.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
(a) Notwithstanding the provisions of §§ 1400.201 through 1400.206, with respect to a farming operation conducted by persons, a majority of whom are family members, an adult family member who makes a significant contribution of active personal labor, active personal management, or a combination of active personal labor and active personal management will be considered to be actively engaged in farming if the adult family member meets the provisions in paragraph (b) of this section.
(b) An adult family member who elects to be considered actively engaged in farming under this section must:
(1) Have a share of the profits or losses from the farming operation commensurate with the person's contributions to the operation and
(2) Make contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the person's claimed share of the farming operation.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
(a) Notwithstanding the provisions of §§ 1400.201 through 1400.206 of this part, with respect to a person who is a sharecropper, the person will be considered to be actively engaged in farming if the sharecropper meets the provisions of paragraph (b) of this section.
(b) A sharecropper who elects to be considered actively engaged in farming under this section must:
(1) Make a significant contribution of active personal labor to the farming operation;
(2) Have a share of the profits or losses from the farming operation commensurate with the person's contribution to the operation; and
(3) Make a contribution to the farming operation that is at risk for a loss, with the level of risk being commensurate with the person's claimed share of the farming operation.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
If the person dies or is incapacitated before a determination is made that the person is “actively engaged in farming,” the representative of the deceased person's estate or the incapacitated person, or other person if necessary, must provide the determining authority information to verify that the person did make a conscious effort to and would have been determined to be actively engaged in farming if not for the person's death or incapacitation. If the person dies or is incapacitated after being determined to be “actively engaged in farming,” the determining authority will allow the determination to be in effect for that program year or fiscal year, as applicable. However, the following year the person or the person's estate must meet all necessary requirements in order to be determined to be “actively engaged in farming” for that year.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
Any person or legal entity that does not satisfy all of the applicable provisions of §§ 1400.201 through 1400.210 and a landowner who rents land to a farming operation for cash or a crop share guaranteed as to the amount of the commodity will not be considered to be actively engaged in farming with respect to the farming operation.
The existence of a hybrid seed contract for a person or legal entity will not be taken into account when making an actively engaged in farming determination with respect to the person or legal entity. However, the person or legal entity must satisfy all other applicable provisions of this part.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
If a person is called to active duty in the military before a determination is made that the person is actively engaged in farming, the person may be considered to be actively engaged in farming if the determining authority determines that the person did make a conscious effort to, and would have been determined to be, actively engaged in farming if the person would not have been called to active duty. If the person is called to active duty after being determined to be actively engaged in farming, the determination will remain in effect for the program year.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020]
(a) Any tenant that is actively engaged in farming in accordance with the provisions of this subpart and conducts a farming operation in which the tenant rents the land for cash, for a crop share guaranteed as to the amount of the commodity, or by any arrangement in which the tenant does not compensate the landlord by cash or a crop share, and receives benefits, with respect to the land under a program specified in § 1400.1(a)(1) and (2) will not be eligible to receive any payment with respect to the cash-rented land unless the tenant independently makes a significant contribution to the farming operation of:
(1) Active personal labor; or
(2) Significant contributions of both active personal management and equipment.
(b) If the equipment is leased by the tenant from:
(1) The landlord, then the lease must reflect the fair market value of the equipment leased with a payment schedule considered reasonable and customary for the area; or
(2) The same person or legal entity that is providing hired labor to the farming operation, then the contracts for the lease of the equipment and for the hired labor must be two separate contracts.
(c) If the equipment is leased by the tenant from the landlord, or from the same person or legal entity that is providing hired labor to the farming operation, then the tenant must exercise complete control over the leased equipment during the entire current crop year. Complete control is defined as exclusive access and use by the tenant.
(d) If the cash rent tenant is a joint operation, then each member or their spouse must make a significant contribution of active personal labor or active personal management as specified in § 1400.203(a)(1)(ii) to be considered eligible for the member's share of the program payments received by the joint operation on the cash rented land.
(e) If the cash rent tenant is a legal entity, then a significant contribution of active personal labor or active personal management must be made to the legal entity as specified in § 1400.204(a)(2) for the legal entity to be considered eligible for the program payments on the cash rented land.
[85 FR 52040, Aug. 24, 2020]
(a) Subject to the conditions set out in paragraphs (b) and (c) of this section, any person who is not a citizen of the United States or an alien lawfully admitted into the United States for permanent residence under the Immigration and Nationality Act (8 U.S.C. 1101-1778) will be ineligible to receive any type of loans or payments made available under Title I of the Food, Conservation, and Energy Act of 2008, the Agricultural Market Transition Act, the Commodity Credit Corporation Charter Act (15 U.S.C. 714-714o), or subtitle D of Title XII of the Food Security Act of 1985 (16 U.S.C. 3831-3836), or under any contract entered into under Title XII of that Act (16 U.S.C. 3801-3845), with respect to any commodity produced, or land set aside from production, on a farm that is owned or operated by the person, unless the person is an individual who is providing land, capital, and a substantial amount of personal labor in the production of crops on the farm. Likewise, and subject to the same conditions, such persons may be ineligible for payments under any other program which by its own regulations specifically provides for that ineligibility and adopts the regulations in this subpart.
(b)
(1) A corporation or other legal entity will be ineligible to receive payments, loans, and benefits if more than 10 percent of the ownership of the legal entity is held by persons who are not citizens of the United States or lawful aliens unless each foreign person who is a stockholder or other type of member provides a substantial amount of active personal labor in the production of crops on a farm owned or operated by the legal entity. However, upon the written request of the legal entity, the Deputy Administrator may make payments in an amount determined by the Deputy Administrator to be representative of the percentage interest of the legal entity that is owned by citizens of the United States and lawful aliens or foreign stockholders or other type of member who provide a significant contribution of active personal labor in the production of crops on a farm owned or operated by the legal entity.
(2) In determining whether more than 10 percent of the ownership of a legal entity is held by persons who are not citizens of the United States or by lawful aliens, the ownership interest will be the higher of the amount of the interest on:
(i) The date the applicable program contract or agreement is executed by the legal entity or
(ii) Any other date prior to the final harvest date that is determined and announced by the Deputy Administrator to be normal in the area for the applicable program crop.
(3) A corporation or other legal entity must inform the county committee of any increase in ownership that occurs after the applicable program contract or agreement is executed.
(4) In the event of an increase in ownership after a payment, loan, or benefit has been made, the legal entity will refund the payment, loan, or benefit.
(5) Where there is only one class of stock or other similar unit of ownership, a person's or legal entity's percentage share of the limited partnership, corporation, or other similar legal entity will be based upon the outstanding shares of stock or other similar unit of ownership held by the person or legal entity as compared to the total outstanding shares of stock or other similar unit of ownership. If the limited partnership, corporation, or other similar legal entity has more than one class of stock or other unit of ownership, the percentage share of the limited partnership, corporation or other similar legal entity owned by a person or legal entity will be determined by the Deputy Administrator on the basis of market quotations. If market quotations are unavailable or so infrequent that they do not represent fair market value, the percentage share will be determined by the Deputy Administrator on the basis of all relevant factors affecting the fair market value of the stock or other unit of ownership, including the various rights and privileges that are attributed to each the class.
(c) A citizen of the United States, lawful alien, or legal entity that is not subject to this part who is in lawful possession, through a lease or otherwise, of a farm owned by a person or legal entity who is subject to this part may receive a payment, loan, and benefit without regard to this part.
[73 FR 79273, Dec. 29, 2008, as amended at 75 FR 19189, Apr. 14, 2010]; 85 FR 52040, Aug. 24, 2020]
(a) Any legal entity, whether foreign or domestic, that executes a program contract or agreement under which a payment, loan, or benefit may be available must provide written notification to the county committee in the county where the legal entity conducts its farming operation if:
(1) Any person, group of persons, legal entity, or group of legal entities holds more than a 10 percent interest in the legal entity; and
(2) The person, group of persons, legal entity, or group of legal entities, in accordance with § 1400.401, are ineligible to receive a payment, loan, or benefit.
(b) Written notification must include the name and social security number or taxpayer identification number of the a person or legal entity, if known, and of all persons and legal entities that hold an interest in the legal entity.
(c) The failure of the legal entity to provide this information will result in the ineligibility of the legal entity to receive any payment, loan, or benefit.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52040, Aug. 24, 2020]
(a) A person or legal entity, other than a joint venture or general partnership, will not be eligible to receive, directly or indirectly, certain program payments or benefits described in § 1400.1 if the average adjusted gross income of the person or legal entity exceeds $900,000 for the 3 taxable years preceding the most immediately preceding complete taxable year, as determined by the Deputy Administrator.
(b) Determinations made under this subpart for conservation programs are:
(1) Applicable starting with the 2015 fiscal year, except for AMA which is applicable with the 2014 fiscal year;
(2) Based on the year for which the conservation program contract or agreement is approved; and
(3) Applicable for the entire term of the subject agreement or contract.
(c) Vendors that receive payment for technical services provided in conjunction with programs made subject to this subpart by regulation or statute, but who are not beneficiaries of the program, are not subject to this subpart for services that are of the type that are also performed by the Federal Government in connection with the programs.
(d) Payments to an escrow agent, or other legal entity of similar capacity in which the recipient is maintaining temporary custody of the funds for eventual disbursement to an eligible program participant, are not subject to this subpart so long as the party ultimately receiving the payment is eligible under this subpart.
(e) Payments to States, counties, political subdivisions and agencies thereof, and Indian tribes as defined in § 1400.3 are not subject to this subpart.
(f) The Administrator or NRCS Chief may waive the limitation under this section on a case-by-case basis for the protection of environmentally sensitive land of special significance. A waiver request must be in writing and:
(1) Show that use of conservation program funding on or adjacent to environmentally sensitive land of special significance is critical to the success of a project that provides conservation benefits to multiple producers or landowners in a community, watershed, or other geographic area;
(2) Demonstrate that the proposed action achieves enduring protection of environmentally sensitive land of special significance through use of a long-term agreement that is greater than 15 years in duration or through use of a deed restriction on the land; or
(3) Present evidence that otherwise demonstrates, as determined by the Administrator or the NRCS Chief, that the waiver is necessary to address the critical natural resources referenced in the definition of environmentally sensitive land of special significance.
[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 85 FR 52040, Aug. 24, 2020]
(a) Except as otherwise provided in this subpart, average adjusted gross income means:
(1) For a person filing a separate tax return, the amount reported as “adjusted gross income” on the final federal income tax return for the person for the applicable tax year;
(2) For a person filing a joint tax return, the amount reported as “adjusted gross income” on the final federal income tax return for the applicable tax year unless a certified statement is provided by a certified public accountant or attorney specifying the manner in which the income would have been declared and reported if the persons had filed two separate returns and that this calculation is consistent with the information supporting the filed joint return;
(3) For a corporation, including a subchapter S corporation, the total reported “taxable income” as reported to the Internal Revenue Service plus the amount of the charitable contributions as reported on the final federal income tax return for the applicable tax year;
(4) For a tax exempt legal entity, the “unrelated business taxable income” of the legal entity as reported to the Internal Revenue Service on the final federal income tax return, less any other income CCC determines to be from non-commercial activities;
(5) For a limited liability company, limited partnership, limited liability partnership, or similar type of organization, the income from trade or business activities plus the amount of guaranteed payments to the members as reported to the Internal Revenue Service on the final federal income tax return for the applicable tax year; and
(6) For an estate or trust, the adjusted total income plus charitable deductions as reported to the Internal Revenue Service on the final federal income tax return for the applicable tax year, or the amount of net increase in the estate's or trust's value resulting from its business or investment interests.
(b) For purposes of applying this subpart and calculating the 3-year average referenced in § 1400.500, that average will be for the adjusted gross income for the 3 taxable years preceding the most immediately preceding complete taxable year, as determined by CCC. For a legal entity that is not required to file a federal income tax return, or a person or legal entity that did not have taxable income in one or more tax years, the average will be the adjusted gross income, including losses, averaged for the 3 taxable years preceding the most immediately preceding complete taxable year, as determined by CCC. A new legal entity will have its adjusted gross income averaged only for those years of the base period for which it was in business; however, a new legal entity will not be considered “new” to the extent it takes over an existing operation and has any elements of common ownership or interests with the preceding legal entity, or with persons or legal entities with an interest in the “old” legal entity. When there is this commonality, income of the “old” legal entity will be averaged with that of the “new” legal entity for the base period.
[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014; 85 FR 50240, Aug. 24, 2020]
(a) To comply with the average adjusted gross income limitation, a person or legal entity, including all interest holders in a legal entity, general partnership, or joint venture, must provide annually the following as required by CCC:
(1) A certification in the manner prescribed by CCC from a certified public accountant or attorney that the average adjusted gross income of the person or legal entity does not exceed the applicable limitation;
(2) A certification from the person or legal entity that the average adjusted gross income of the person or legal entity does not exceed the applicable adjusted gross income limitations;
(3) The relevant Internal Revenue Service documents and supporting financial data as requested by CCC. Supporting financial data may include State income tax returns, financial statements, balance sheets, reports prepared for or provided to another Government agency, information prepared for a private lender, and other credible information relating to the amount and source of the person's or legal entity's income;
(4) Authorization for CCC to obtain tax data from the Internal Revenue Service for purposes of verification of compliance with this subpart.
(b)
(1) All persons and legal entities are subject to an audit by FSA of any information submitted in accordance with this subpart. As a part of this audit, income tax returns may be requested, and if requested, must be supplied by all related persons and legal entities.
(2) In addition to any other requirement under any Federal statute, relevant Federal income tax returns and documentation must be retained a minimum of two years after the end of the calendar year corresponding to the year for which payments or benefits are requested.
(c) Failure to comply with this subpart's requirements, will result in ineligibility for all program benefits subject to this subpart for the year or years subject to the request.
[73 FR 79273, Dec. 29, 2008, as amended at 79 FR 21097, Apr. 14, 2014]
(a) Any program payment or benefit subject to this subpart provided to a legal entity, general partnership, or joint venture will be reduced by an amount commensurate with the direct and indirect ownership interest in the legal entity, general partnership, or joint venture of each person or legal entity determined to have an average adjusted gross income in excess of the applicable limitation under the standards provided elsewhere in this subpart for the direct recipient of the payments.
(b) Ownership interest in a legal entity will be reviewed to the fourth level of ownership, as specified in § 1400.105, to determine whether a commensurate reduction is applicable and the extent of the reduction. If an ownership interest is not held by a person in the fourth level of ownership in a legal entity, no payment or benefit will be made with respect to the interest.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52040, Aug. 24, 2020]
80 FR 78128, Dec. 16, 2015, unless otherwise noted.
(a) This subpart is applicable to all of the programs as specified in § 1400.1 and any other programs as specified in individual program regulations.
(b) The requirements of this subpart will apply to farming operations for FSA program payment eligibility and limitation purposes as specified in subparts B and C of this part.
(c) The requirements of this subpart do not apply to farming operations specified in paragraph (b) of this section if either:
(1) All persons who are partners, stockholders, or persons with an ownership interest in the farming operation or of any entity that is a member of the farming operation are family members as defined in § 1400.3; or
(2) The farming operation is seeking to qualify only one person as making a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, for the purposes of qualifying only one person or entity as actively engaged in farming.
(a) The terms defined in § 1400.3 are applicable to this subpart and all documents issued in accordance with this part, except as otherwise provided in this section.
(b) The following definitions are also applicable to this subpart:
Active personal management means personally providing and participating in management activities considered critical to the profitability of the farming operation and performed under one or more of the following categories:
(i) Capital, which includes:
(A) Arranging financing and managing capital;
(B) Acquiring equipment;
(C) Acquiring land and negotiating leases;
(D) Managing insurance; and
(E) Managing participation in USDA programs;
(ii) Labor, which includes hiring and managing of hired labor; and
(iii) Agronomics and marketing, which includes:
(A) Selecting crops and making planting decisions;
(B) Acquiring and purchasing crop inputs;
(C) Managing crops (that is, whatever managerial decisions are needed with respect to keeping the growing crops living and healthy—soil fertility and fertilization, weed control, insect control, irrigation if applicable) and making harvest decisions; and
(D) Pricing and marketing of crop production.
Significant contribution of active personal management means active personal management activities performed by a person, with a direct or indirect ownership interest in the farming operation, on a regular, continuous, and substantial basis to the farming operation, and meets at least one of the following to be considered significant:
(i) Performs at least 25 percent of the total management hours required for the farming operation on an annual basis; or
(ii) Performs at least 500 hours of management annually for the farming operation.
Significant contribution of the combination of active personal labor and active personal management means a contribution of a combination of active personal labor and active personal management that:
(i) Is critical to the profitability of the farming operation;
(ii) Is performed on a regular, continuous, and substantial basis; and
(iii) Meets the following required number of hours:
Table 1 to Paragraph (iii) of the Definition of Significant Contribution of the Combination of Active Personal Labor and Active Personal Management
| Combination of active personal labor and active personal management minimum requirement for a significant contribution | ||
|---|---|---|
| Management contribution in hours | Labor contribution
in hours |
Meets the minimum threshold for
significant contribution, in hours |
| 475 | 75 | 550 |
| 450 | 100 | 550 |
| 425 | 225 | 650 |
| 400 | 250 | 650 |
| 375 | 375 | 750 |
| 350 | 400 | 750 |
| 325 | 425 | 750 |
| 300 | 550 | 850 |
| 275 | 575 | 850 |
| 250 | 600 | 850 |
| 225 | 625 | 850 |
| 200 | 650 | 850 |
| 175 | 675 | 850 |
| 150 | 800 | 950 |
| 125 | 825 | 950 |
| 100 | 850 | 950 |
| 75 | 875 | 950 |
| 50 | 900 | 950 |
| 25 | 925 | 950 |
[85 FR 73602, Nov. 19, 2020]
(a) If a farming operation includes any nonfamily members as specified under the provisions of § 1400.201(b)(2) and (3) and the farming operation is seeking to qualify more than one person as providing a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, then:
(1) Each person must maintain contemporaneous records or logs as specified in § 1400.603; and
(2) Subject to paragraph (b) of this section, if the farming operation seeks not more than one additional person to qualify as providing a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, because the operation is large, then the operation may qualify for one additional person if the farming operation:
(i) Produces and markets crops on 2,500 acres or more of cropland;
(ii) Produces honey with more than 10,000 hives; or
(iii) Produces wool with more than 3,500 ewes; and
(3) If the farming operation seeks not more than one additional person to qualify as providing a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, because the operation is complex, then the operation may qualify for one additional person if the farming operation is determined by the FSA state committee as complex after considering the factors described in paragraphs (a)(3)(i) and (ii) of this section. Any determination that a farming operation is complex by an FSA state committee must be reviewed and DAFP must concur with that determination for it to be implemented. To demonstrate complexity, the farming operation will be required to provide information to the FSA state committee on the following:
(i) Number and type of livestock, crops, or other agricultural products produced and marketing channels used; and
(ii) Geographical area covered.
(b) FSA state committees may adjust the limitations described in paragraph (a)(2) of this section up or down by not more than 15 percent if the FSA state committee determines that the relative size of farming operations in the state justify making a modification of either or both of these limitations. If the FSA state committee seeks to make a larger adjustment, then DAFP will review and may approve the request.
(c) If a farming operation seeks to qualify a total of three persons as providing a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, then the farming operation must demonstrate both size and complexity as specified in paragraph (a) of this section.
(d) In no case may more than three persons in the same farming operation qualify as providing a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, as defined by this subpart.
(e) A person's contribution of active personal management, or the contribution of the combination of active personal labor and active personal management, to a farming operation specified in § 1400.601(b) will only qualify one member of that farming operation as actively engaged in farming as defined in this part. Other individual persons in the same farming operation are not precluded from making management contributions, except that the contributions will not be recognized as meeting the requirements of being a significant contribution of active personal management.
[80 FR 78128, Dec. 16, 2015, as amended at 85 FR 52040, Aug. 24, 2020]
(a) Any farming operation requesting that more than one person qualify as making a significant contribution of active personal management, or a significant contribution of the combination of active personal labor and active personal management, must maintain contemporaneous records or activity logs for all persons that make any contribution of any management to a farming operation under this subpart that must include, but are not limited to, the following:
(1) Location where the management activity was performed; and
(2) Time expended and duration of the management activity performed.
(b) To qualify as providing a significant contribution of active personal management each person covered by this subpart must:
(1) Maintain these records and supporting business documentation; and
(2) If requested, timely make these records available for review by the appropriate FSA reviewing authority.
(c) If a person fails to meet the requirement of paragraphs (a) and (b) of this section, then both of the following will apply:
(1) The person's contribution of active personal management as represented to the farming operation for payment eligibility purposes will be disregarded; and
(2) The person's payment eligibility will be re-determined for the applicable program year.