Farm Program Payment Limitation and Payment Eligibility for 2009 and Subsequent Crop, Program, or Fiscal Years, 79267-79284 [E8-30764]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 73, Number 249 (Monday, December 29, 2008)]
[Rules and Regulations]
[Pages 79267-79284]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-30764]



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Federal Register / Vol. 73, No. 249 / Monday, December 29, 2008 / 
Rules and Regulations

[[Page 79267]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR 1400

RIN 0560-AH85


Farm Program Payment Limitation and Payment Eligibility for 2009 
and Subsequent Crop, Program, or Fiscal Years

AGENCY: Commodity Credit Corporation, USDA.

ACTION: Interim rule.

-----------------------------------------------------------------------

SUMMARY: The Commodity Credit Corporation (CCC) is revising regulations 
as required by the Food, Conservation, and Energy Act of 2008 (the 2008 
Farm Bill) to make changes in payment eligibility, payment attribution, 
maximum income limits, and maximum dollar benefit amounts for 
participants in CCC-funded programs. This interim rule amends the 
regulations to ensure that program payments and benefits are issued 
only to those persons and entities that meet all eligibility 
requirements, that a program participant does not receive any program 
payment above the maximum allowable benefit amount, and that applicable 
payments are not made to anyone whose average adjusted gross income 
exceeds the maximum dollar amounts established by the 2008 Farm Bill. 
This interim rule will apply to 2009 and subsequent crop, program, or 
fiscal year benefits for programs subject to the provisions in our 
regulations.

DATES: Effective Date: This rule is effective December 23, 2008.
    Comment Date: We will consider comments that we receive by January 
28, 2009.

ADDRESSES: We invite you to submit comments on this interim rule. In 
your comment, include the volume, date, and page number of this issue 
of the Federal Register. You may submit comments by any of the 
following methods:
     E-Mail: Salomon.Ramirez@wdc.usda.gov.
     Fax: (202) 690-2130.
     Mail: Salomon Ramirez, Director, Production, Emergencies 
and Compliance Division, FSA, U.S. Department of Agriculture (USDA), 
Stop 0517, Room 4752, 1400 Independence Ave., SW., Washington, DC 
20250-0517.
     Hand Delivery or Courier: Deliver comments to the above 
address.
     Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting 
comments.
    Comments may be inspected at the mail address listed above between 
8 a.m. and 4:30 p.m., Monday through Friday, except holidays. A copy of 
this interim rule is available through the Farm Service Agency (FSA) 
home page at https://www.fsa.usda.gov/.

FOR FURTHER INFORMATION CONTACT: Salomon Ramirez, Director, Production, 
Emergencies and Compliance Division, FSA, USDA, Stop 0517, 1400 
Independence Ave., SW., Washington, DC 20250-0517. Telephone: (202) 
720-7641. Electronic mail: Salomon.Ramirez@wdc.usda.gov. Persons with 
disabilities who require alternative means for communication (Braille, 
large print, audio tape, etc.) should contact the USDA Target Center at 
(202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Background

    This rule implements provisions in sections 1603 and 1604 of the 
2008 Farm Bill (Pub. L. 110-246) concerning payment eligibility and 
payment limits for participants in CCC-funded programs. The 2008 Farm 
Bill provides new eligibility requirements based on annual income, 
sources of income, and type of entity. This rule amends 7 CFR part 1400 
to implement these changes.

Applicability of Part 1400

    The applicability of part 1400 is amended as required by the 2008 
Farm Bill to include new programs authorized by the 2008 Farm Bill. 
These changes are specified in Sec.  1400.1, ``Applicability.'' All of 
the amendments made by this rule apply to the 2009 and subsequent crop, 
program, or fiscal years.

Payment Eligibility--Annual Income and Sources of Income

    The 2008 Farm Bill provides that, notwithstanding any other 
provision of law, a person or legal entity is not eligible to receive 
commodity program benefits such as direct payments and counter-cyclical 
payments or Average Crop Revenue Election (ACRE) program payments if 
the average adjusted gross income (AGI) of the person or legal entity 
from nonfarm sources exceeds $500,000. Similarly, a person or legal 
entity is not eligible for direct payments if the average adjusted 
gross income from farming, ranching, and forestry operations of the 
person or legal entity exceeds $750,000. A person or legal entity is 
ineligible for conservation program benefits or payments if the average 
adjusted gross nonfarm income of the person or legal entity exceeds 
$1,000,000, unless not less than 66.66 percent of the adjusted gross 
income of the person or legal entity is derived from farming, ranching, 
and forestry operations, as determined by the Secretary. As required by 
the 2008 Farm Bill, this rule provides that with respect to programs 
administered by FSA the Administrator of FSA may waive the AGI limit 
for conservation and related program benefits on a case-by-case basis 
for the protection of environmentally sensitive land or other land of 
special significance. Similarly, with respect to programs administered 
by the Natural Resources Conservation Service (NRCS), this rule 
provides that the Chief of NRCS may issue such a waiver. Specific 
criteria that must be met for the consideration of the wavier are 
outlined in this rule.
    The AGI limits implemented by this rule replace the prior limit of 
$2.5 million and the previous exception for those earning 75 percent of 
their income from farming.
    This rule amends Sec.  1400.3, ``Definitions,'' to add definitions 
for ``Average Adjusted Gross Income,'' ``Average Adjusted Gross Farm 
Income,'' and ``Average Adjusted Gross Nonfarm Income.'' It also amends 
subpart F (prior to this rule, subpart G), ``Average Adjusted Gross 
Income Limitation,'' to implement these AGI limits that are required by 
the 2008 Farm Bill.
    The 2008 Farm Bill AGI requirements for payment eligibility apply 
to payments from commodity programs

[[Page 79268]]

and from all conservation programs that are specified by Title II of 
the 2008 Farm Bill and Title XII of the Food Security Act of 1985 (Pub. 
L. 99-198, commonly known as the 1985 Farm Bill). AGI will be 
calculated based on the average income for the 3 taxable years 
preceding the most immediately preceding complete taxable year for 
which benefits are requested. The 3 year average method of determining 
AGI is unchanged, except that the relevant 3 year period is now the 3 
taxable years preceding the most immediately preceding complete taxable 
year for which benefits are requested, while previously the method used 
the 3 years prior to the year for which program benefits are requested. 
The definition of AGI will be based on the Internal Revenue Service 
definition, which is unchanged.
    The definition of income derived from farming, ranching, and 
forestry operations in Sec.  1400.501, ``Determination of Average 
Adjusted Gross Income,'' is expanded by this rule to include income 
from the processing, storing, and transporting of farm, ranch, and 
forestry commodities; production of farm-based renewable energy; and, 
in some instances, the provision of production inputs and services to 
farmers, ranchers, and foresters. These activities were included in the 
provisions for determining farm income in section 1604 of the 2008 Farm 
Bill.

Payment Limits for Specific Programs

    Subpart A, ``General Provisions,'' Sec.  1400.1, ``Applicability,'' 
sets payment limits for specific programs. The 2008 Farm Bill provides 
that the payment limit is $40,000 for the Direct and Counter-cyclical 
Program (DCP) direct payments and $65,000 for DCP counter-cyclical 
payments. That is unchanged from the previous limit. The limit of 
$50,000 for CRP payments is unchanged. The limit of $100,000 for 
Noninsured Crop Disaster Assistance Program (NAP) payments is 
unchanged. The limit on Environmental Quality Incentives Program (EQIP) 
payments is reduced from $450,000 to $300,000 for the term of the 
program.
    This rule adds a limit of $100,000 for Supplemental Revenue 
Assistance Program (SURE) payments and for Tree Assistance Program 
(TAP) payments. Total payments from SURE, the Livestock Indemnity 
Program (LIP), the Livestock Forage Disaster Program (LFP), and the 
Emergency Assistance Program for Livestock, Honey Bees, and Farm-raised 
Fish (ELAP) may not exceed $100,000.
    This rule removes the limit of $75,000 specifically for the 
Marketing Assistance Loans (MAL) program gains and Loan Deficiency 
Payments (LDP) program; there are no longer any limits on payments for 
MAL and LDP.
    As specified in the 2008 Farm Bill, if a person or legal entity is 
participating in ACRE, the direct payments will be reduced by 20 
percent on each farm participating in ACRE. The total limit for 
counter-cyclical payments and ACRE payments as specified in this rule 
is $65,000 plus the amount the direct payments were reduced. The 2008 
Farm Bill specifies the same limits for peanuts. All the program-
specific payment limits are specified in Sec.  1400.1, 
``Applicability.''

Payment Limitation--Eligible Persons and Entities

    The regulations governing persons and legal entities eligible for 
payments are in part 1400, subpart B. This rule changes the title of 
subpart B, ``Person Determinations,'' to ``Payment Limitation'' and 
makes other changes to the subpart required by the 2008 Farm Bill.
    This rule amends the definition of ``person'' and adds a definition 
of ``legal entity'' in Sec.  1400.3, ``Definitions.'' The 2008 Farm 
Bill defines ``person'' as a natural person. The definition of person 
in this rule no longer includes a legal entity or government agency.
    This rule removes the sections in subpart B describing various 
kinds of legal entities that are no longer relevant for the purpose of 
determining payment limits.
    This rule changes the provisions for spouses in regard to separate 
or combined status for payment limitation purposes. Spouses may still 
each qualify for a separate payment limitation, but the provisions 
where husband and wife are considered combined for the purposes of this 
part are removed. While each spouse may now have their own respective 
limitation, each must also meet applicable program and payment 
eligibility requirements to receive program benefits. The rule includes 
a new provision by which if one spouse is determined to be actively 
engaged in farming, the other spouse is credited for the purposes of 
payment eligibility with making significant contributions of active 
personal labor or active personal management to the farming operation. 
This is not to be construed as meaning if one spouse qualifies for 
payment, the other automatically qualifies as well. As previously 
mentioned, both spouses must make significant and requisite 
contributions to the farming operation that are commensurate with their 
claimed shares to be considered actively engaged in farming and 
eligible for program benefits.
    This rule removes both the 3-entity rule for payment limitation 
purposes and the definition of substantial beneficial interest. A 
person may now receive program benefits through an unlimited number of 
entities. The process of determining payment limits for entities no 
longer requires a designation of substantial beneficial interest. Since 
substantial beneficial interest only applied to the designation of 
entities for payment under the 3-entity rule, that term is not 
necessary and has been removed.
    Payment limitation will be determined by direct attribution, taking 
into account the direct and indirect ownership interests of a person or 
legal entity that is eligible to receive such payment. The new 
attribution of payments provisions are in a new Sec.  1400.105, 
``Attribution of Payments,'' and a new definition of attribution is 
added to Sec.  1400.3, ``Definitions.'' Attribution will be tracked 
through four levels of ownership in legal entities. For the purposes of 
determining whether a person or legal entity has met the new payment 
limits, every payment made directly to a person or legal entity will be 
combined with their pro rata interest in payments received by a legal 
entity in which the person or legal entity has a direct or indirect 
ownership interest. Payments made to a legal entity will be attributed 
directly to persons and limited to the amounts specified in subpart A.
    This rule adds a new Sec.  1400.107, ``Notification of Interests,'' 
which requires each person or legal entity receiving payments to 
provide the name and taxpayer ID number of each legal entity in which 
the person or legal entity holds an ownership interest. While this is 
designated as a new section, this requirement was in effect previous to 
the 2008 Farm Bill, as part of the eligibility requirements for the 
now-obsolete 3-entity rule.
    Payments made to a joint venture or general partnership will not 
exceed the payment limit multiplied by the number of persons or legal 
entities (other than joint ventures and general partnerships) that 
comprise the direct ownership of the joint venture or general 
partnership.
    Payments issued to a minor child will be attributed to the child's 
parent who receives the larger amount in program payments compared to 
the other parent, both directly and indirectly, unless certain 
conditions are otherwise met.
    For the purposes of attribution in Sec.  1400.105, ``Attribution of 
Payments,'' the payment limitations specified will not apply to 
marketing cooperatives but

[[Page 79269]]

will now apply to the producers or members of those cooperatives as 
persons.
    The 2008 Farm Bill provides that Federal agencies are not eligible 
for program benefits. Similarly, State and local governments and 
political subdivisions, and agencies thereof, will no longer be 
eligible, with an exception for payments earned on State-owned land 
that is used for the support of public schools. Payments received under 
this public school support exception are limited to $500,000 annually, 
unless the State has a population of less than 1.5 million.
    This rule amends Sec.  1400.3 by removing the definition of 
``Tribal venture.'' This rule also amends Sec.  1400.4 by removing all 
references to Indian tribal ventures, including the restrictions on 
payments to such ventures. In this rule, Sec.  1400.4 exempts Indian 
tribes, as defined in 1400.3, from all requirements of this part. 
Provisions of this part apply to persons or legal entities. Indian 
tribes are not included under the definition of person or legal entity 
as provided by the 2008 Farm Bill for the application of the payment 
eligibility and payment limitation provisions. The 2008 Farm Bill does 
not impose any limitations or restrictions on program payments and 
benefits to Federally recognized Indian tribes. This exemption to the 
provisions of this part only applies to Indian tribes. The payment 
eligibility and payment limitation requirements remain applicable to 
individual American Indians or Alaska Natives receiving program payment 
and benefits as individuals, or through a group in which all members of 
the group are American Indians or Alaska Natives.
    This rule provides more restrictive payment eligibility 
requirements than the prior requirements for new persons and legal 
entities that are added to an existing farming operation. These 
requirements, referred to as the ``substantive change'' rule, are found 
in Sec.  1400.104 (previously Sec.  1400.109), ``Changes in Farming 
Operations.'' These discretionary changes require that any transfer of 
land or equipment by sale or gifting between existing members and new 
members must be based on fair market value of the land or equipment, 
the sale cannot be owner financed, and the former owner of the land or 
equipment cannot retain any residual control or preferential buyback 
rights to the land or equipment. This is to ensure that this change or 
transfer actually occurs other than just on paper. Otherwise, the 
person or legal entity being added to the farming operation could be 
obtaining program payments in the absence of making the requisite and 
significant contributions to the farming operation for eligibility. 
Furthermore, the farming operation would be gaining another limitation 
even though no real, meaningful change occurred in the farming 
operation to justify the additional limitation.
    Requirements in the substantive change rule for an addition of 
persons or legal entities to an existing farming operation can also be 
met through an addition of land to the existing farming operation. 
Previously, an increase of cropland operated by the farming operation 
of at least 20 percent and with a planting history comparable to the 
area was required. Now the requirement is the addition of base acres in 
an amount that represents at least a 20 percent increase from the 
previous year. This 20 percent increase in base acres will now qualify 
one additional person or legal entity for payment limitation purposes, 
rather than an unlimited number of additional persons or legal 
entities. However, additional persons or legal entities beyond one for 
payment limitation purposes may be recognized if an FSA State Office 
specialist determines that the increase in base acres was of a 
magnitude that would support further additions to the farming operation 
of persons or legal entities for payment limitation purposes.
    These revisions to the substantive change rule are being announced 
prior to the beginning of a crop or program year to afford adequate 
time for any existing farming operation and its members that are 
contemplating such operational changes for the coming year to be fully 
informed of these revisions.
    An example of whether a change in farming operations will be 
considered a ``substantive change'' by this rule would be that Father A 
has previously conducted an individual farming operation consisting of 
all owned land. In 2009, Father A expands the operation by forming a 
three-member general partnership with his now adult children B and C, 
and with each member having equal shares. No additional acreage is 
farmed, but Father A has gifted to each child one-third of the owned 
land. The gifted land is commensurate with individuals' share of the 
farming operation. Previously, this would be considered a bona fide and 
substantive change in the farming operation. Through the landowner 
provision, each person would be considered actively engaged in farming 
and each would have their own respective payment limitation.
    With this interim rule, this would still be considered a 
substantive change in the farming operation, but proof of the gifting 
of this land to the children must be provided. The land transfers would 
most likely be recorded at the Register of Deeds, new deeds would be 
issued to reflect the current owners of the land, and all parties would 
have been expected to report the gifts to the Internal Revenue Service 
(IRS) for tax purposes. Documentation as described would lend support 
that the substantive change requirements were met.
    Another example would be an existing three-member general 
partnership comprised of a Father B and children D and E. The decision 
was made to expand the farming operation for 2009 for the inclusion of 
two newly formed limited liability companies, F and G, each of which 
are comprised of the individuals, B, D and E. The decision to expand 
the operation was based on the rental of the neighbor's farm. The 
increase in base acres held by the general partnership in 2008 and the 
amount that would be controlled in 2009 was over 50 percent.
    Previously, this would be considered a bona fide and substantive 
change in the farming operation as the addition was of cropland of at 
least 20 percent. Both of the legal entities would have been recognized 
in the farming operation for payment limitation purposes. Under the 
revised regulation, a substantive change will be considered to have 
occurred in the farming operation with the increase in base acres of at 
least 20 percent. Under the revised regulation, the bona fide and 
substantive change which occurred in the farming operation with the 
increase in base acres of more than 20 percent would initially qualify 
only one of the legal entities for payment limitation purposes. 
However, in this example, the increase in base acres was twice the 
minimum amount required. The partnership would therefore be afforded 
the opportunity to submit a written request for the increase in one 
additional person or legal entity to the farming operation. The request 
would be forwarded to the reviewing authority in the State FSA office 
designated to consider such cases. Upon review of the supporting 
documentation provided with the request, a determination would be made 
and issued accordingly.
    The entire subpart D that provided the specifics of the 3-entity 
rule is removed, and subsequent subparts redesignated. The 2008 Farm 
Bill eliminated the 3-entity rule. The removal of this subpart means 
that persons can receive payments based on ownership in an unlimited 
number of entities, until the payment limits in subpart A are reached. 
All payments will be traced

[[Page 79270]]

through four levels of ownership for direct attribution to persons.

Clarifications Made To Provide Clarity and Enforceability

    This interim rule also implements revisions to the existing 
requirements for payment eligibility and payment limitation. These 
changes are made to strengthen or clarify existing regulatory 
provisions while remaining consistent with statutory provisions, to 
provide consistency in determinations, and to simplify the 
administration of the payment eligibility and payment limitation 
provisions.
    This rule amends Sec.  1400.2, ``Administration,'' to clarify that 
eligibility determinations will be made within 60 days after the 
supporting documentation is received in the county office.
    This rule amends Sec.  1400.502 (redesignated, previously Sec.  
1400.602), ``Compliance and Enforcement,'' to require that persons and 
legal entities provide detailed supporting documentation on AGI each 
year to CCC. Previously, the regulation required this compliance 
information only when specifically required by CCC. Similarly, this 
rule amends that same section to specify that audits will be conducted 
to determine compliance, while previously the regulation specified only 
that audits may be conducted.
    This rule amends Sec.  1400.6, ``Joint and Several Liability'' 
(redesignated, previously Sec.  1400.7), to clarify possible conditions 
for release from liability. The provisions of the 2008 Farm Bill now 
extend the reach of liability for the recovery of payments to any party 
determined to have participated in a scheme or device or other equally 
serious actions for the purpose of evading the provisions of this part. 
In the event a person cooperates with the enforcement of these 
provisions, the Executive Vice President of CCC has the authority to 
partially or fully release that person from liability.

Payment Eligibility--Actively Engaged in Farming

    This rule changes the title of subpart C from ``Actively Engaged in 
Farming Determinations'' to ``Payment Eligibility.'' The general 
structure and content of this subpart remain unchanged. The 2008 Farm 
Bill requires that, in order to be eligible for payment, a person or 
legal entity be actively engaged in farming, and further defines 
``actively engaged'' as consisting of a substantial contribution of 
capital, equipment, or land and personal labor or active personal 
management. This interim rule clarifies the ``actively engaged'' 
eligibility requirements to be consistent with the 2008 Farm Bill, 
including making discretionary changes as to what constitutes a 
substantial contribution and who must make such a contribution. This 
rule provides that a contribution of active personal labor, active 
personal management, or a combination thereof, must be provided by each 
member or shareholder that has an ownership interest in an entity that 
requests program benefits and collectively, such contributions must be 
significant and commensurate. Furthermore, the contribution of active 
personal labor or active personal management of each member of 
shareholder must be made to the farming operation on a regular basis 
and must be identifiable and documentable as a separate and distinct 
contribution from that of any other member or shareholder in the 
farming operation. The 2008 Farm Bill requires a significant 
contribution of active personal labor or active personal management to 
a farming operation to qualify a person or legal entity for payment. 
Previously, significant contributions could be made by members or 
stockholders that comprised only 50 percent ownership interest in the 
entity being qualified in order to qualify all the members or 
stockholders. Previously, the active personal labor or management 
contribution for the legal entity could be made by some of the 
stockholders or members, while the remaining stockholders and members 
could make no requisite and at-risk contributions to the farming 
operation and still realize benefits indirectly through the legal 
entity.
    An example to illustrate the changes in this interim rule 
concerning what constitutes actively engaged in farming is provided 
below:
    Corporation A is held equally by stockholders B, C, D and E. 
Corporation A provides all of the capital, leases all of the equipment, 
cash rents all of the land, and hires all of the labor necessary to 
farm this land. The stockholders represent that they equally provide 
all of the active personal management necessary to successfully conduct 
this farming operation. Regular management meetings are held, either in 
person or by conference call, in which the stockholders jointly make 
all decisions concerning all financing, purchasing, planting, 
harvesting, marketing and the supervision of all hired labor in the 
farming operation.
    Previously, the corporation just described would be considered 
actively engaged in farming by the entity's contributions of capital, 
land and equipment, and the collective contribution of active personal 
management of all stockholders. The stockholders that made 
contributions to qualify the entity held more than 50 percent ownership 
interest in the entity that requested program benefits.
    With this rule, each of the stockholders in this example would be 
required to establish that their respective contribution of active 
personal management was made on a regular basis, and was identifiable 
and documentable as separate and distinct from the other stockholders 
of the entity. For example, stockholder B could represent through 
copies of signed purchase orders that stockholder B was individually 
responsible for obtaining and purchasing all inputs for the farming 
operation on behalf of the Corporation. Stockholder C could represent 
through signed contracts and delivery agreements with grain elevators 
and a cotton gin that stockholder C was individually responsible for 
the marketing of all commodities produced by the Corporation's farming 
operation. Stockholder D could represent through copies of payroll 
records that stockholder D was individually responsible for the 
supervision of all hired labor utilized by the Corporation's farming 
operation. However, if Stockholder E made no claim of management that 
is separate and distinct from the other stockholders, then as the 
result of Stockholder E's failure to meet the requirements of this 
interim rule, the payments issued to the payment entity, that being 
Corporation A, would be reduced by the interest held by Stockholder E.

Reduction or Denial of Program Payments and Benefits

    The provisions for the denial of program payments and benefits are 
expanded under the 2008 Farm Bill. Payments and benefits will be denied 
for at least two years if a person or legal entity is determined to 
have adopted a scheme or device to circumvent the payment eligibility 
and payment limitation requirements. This interim rule now provides 
additional guidance in Sec.  1400.5, ``Denial of Program Benefits'' 
(renamed, previously titled ``Scheme or Device''), on what actions are 
considered to be a scheme or device and what the indicators may be that 
a scheme is being perpetrated. Under the 2008 Farm Bill, if fraud or 
other equally serious actions are determined to exist, all parties 
involved may be ineligible for all payments and benefits under the 
programs subject to the provisions of this part for up to 5 years.
    The application of the AGI limitation requires a reduction in any 
payments or

[[Page 79271]]

benefits issued to a joint venture, general partnership or legal entity 
in an amount commensurate with the direct and indirect ownership 
interest of any person or legal entity that fails to comply with the 
respective adjusted gross income limitation eligibility standard for 
the direct receipt of such payments or benefits. Previously, ownership 
interest was tracked and reviewed to the sixth level to determine 
whether a commensurate reduction was applicable and the extent of such 
reduction. Now with the implementation of direct attribution for 
payment limitation in which ownership in legal entities is tracked 
through four levels, the ownership interest in legal entities for the 
application of the AGI limitations will also be tracked through the 
same number of levels.

Miscellaneous Minor Changes and Housekeeping

    Subparts D, ``Cash Rent Tenants,'' and E, ``Foreign Persons'' 
(redesignated, previously subparts E and F), are largely unchanged, 
except for the references to natural persons and legal entities 
discussed above and that were made throughout the part. This rule makes 
minor amendments to subpart D, ``Cash Rent Tenants,'' to clarify that 
if a cash rent tenant is a joint operation, each member must make a 
significant contribution of active personal labor or management to be 
eligible for payments. This amendment is needed to be consistent with 
other changes in this part regarding payment eligibility and with the 
2008 Farm Bill.
    This rule reorganizes part 1400, including changing the order of 
some sections, renumbering sections, and renaming some sections and 
subparts. These housekeeping changes are intended to improve 
readability and do not make substantive changes to the regulations. 
Subpart B, ``Person Determinations,'' is renamed ``Payment 
Limitation.'' Subpart C, ``Actively Engaged in Farming 
Determinations,'' is renamed ``Payment Eligibility.'' Subpart D, 
``Permitted Entities,'' is removed; subsequent subparts are renumbered. 
Throughout the part, references to ``individual(s) and entities'' are 
changed to ``person(s) and legal entities,'' consistent with the 2008 
Farm Bill requirement to attribute payments to natural persons. 
Similarly, references to 2003 through 2007 crop years are changed to 
refer to the 2009 through 2012 crop years.

       Summary of Amendments to 7 CFR Part 1400 Made by This Rule
------------------------------------------------------------------------
     Previous regulation                   Revised regulation
------------------------------------------------------------------------
Title of part 1400. Payment    Title amended to specify ``for 2009 and
 Limitation and Payment         Subsequent Crop, Program or Fiscal
 Eligibility.                   years.''
Subpart A--General provisions  Revised references to the programs for
Sec.   1400.1 Applicability..   which this regulation now applies
                                including ACRE, NAP, ELAP, LFP, LIP,
                                TAP, and applicable NRCS conservation
                                programs, and added the respective
                                payment limitations. Applicable NRCS
                                conservation programs include:
                                   Agricultural Management
                                   Assistance (AMA),
                                   Agricultural Water
                                   Enhancement Program (AWEP),
                                   Chesapeake Bay Watershed
                                   Program (CBWP),
                                   Conservation Stewardship
                                   Program (CSTP),
                                   Cooperative Conservation
                                   Partnership Initiative (CCPI),
                                   Environmental Quality
                                   Incentives Program (EQIP),
                                   Farm and Ranchland Protection
                                   Program (FRPP),
                                   Grasslands Reserve Program
                                   (GRP),
                                   Wetlands Reserve Program
                                   (WRP), and
                                   Wildlife Habitat Incentive
                                   Program (WHIP).
                               Removed the programs for which this
                                regulation no longer applies.
Sec.   1400.2 Administration.  Provided a reference point for the start
                                of the 60-day period for CCC to make
                                determinations.
                               Clarified that the 60-day time period
                                specified does not apply to the
                                completion of end of year reviews for
                                compliance.
Sec.   1400.3 Definitions....  New definitions for attribution, average
                                adjusted gross income, average adjusted
                                gross farm income, average adjusted
                                gross nonfarm income, contribution, and
                                legal entity.
                               Revised definitions for person, joint
                                operation, active personal labor, and
                                active personal management.
                               Removed definitions of entity, Indian
                                tribal ventures, permitted entity, and
                                substantial beneficial interest.
Sec.   1400.4 Indian Tribal    Title changed to Indian Tribes.
 Ventures.
                               Added that Indian tribes, as defined, are
                                exempt from all provisions of this part.
Sec.   1400.5 Scheme or        Title changed to Denial of program
 Device.                        benefits:
                               Added (1) Indicators of actions that may
                                be considered a scheme or device;
                               (2) The period of ineligibility if fraud
                                is determined;
                               (3) Producer ineligibility extends to
                                cash rent tenants; and
                               (4) Denial of benefits to all parties on
                                a pro rata basis according to ownership
                                interest.
Sec.   1400.6 Joint and        Added (1) The basis and extent of
 Several Liability.             ineligibility and payment recovery and
                               (2) Possible conditions for partial or
                                full release from liability.
                               Removed reference to individuals and
                                entities considered one ``person.''
Sec.   1400.7 Commensurate     Title changed to Commensurate
 Contributions.                 Contributions and Risk.
                               Revised reference from individuals and
                                entities to persons and legal entities.
                               Added that risk must be commensurate with
                                the claimed share of the farming
                                operation.
Sec.   1400.9 Appeals........  Revised reference from individuals and
                                entities to persons and legal entities.
1400 Subpart B Person          Renamed to Payment Limitation.
 Determinations.               Removed all references to ``person''
Sec.   1400.100 through         determinations and the timing of making
 1400.107.                      such ``person'' determinations.
                               Replaced with (1) Provisions for the
                                control and limitation of payments to
                                persons and legal entities by direct
                                attribution;
                               (2) Limitations and other restrictions
                                for payments to States, political
                                subdivisions and agencies thereof;
                               (3) New provisions applicable only to
                                spouses;

[[Page 79272]]

 
                               (4) Additional requirements for the
                                increase in persons to a farming
                                operation that are eligible for payment;
                                and
                               (5) Required information from all persons
                                and legal entities that request program
                                payments.
                               Removed sections 1400.108 and 109.
1400 Subpart C Actively        Renamed to Payment Eligibility.
 Engaged in Farming            Revised all references of individual and
 Determinations.                entity to person and legal entity.
Sec.   1400.201 through
 1400.213.
                               For uniformity, moved requirements of the
                                definitions of ``separate and distinct
                                interest'' and significant contribution
                                from Sec.   1400.3, ``Definitions,'' to
                                the applicable sections of the subpart.
                               Included additional requirements for the
                                contributions of active personal labor
                                or management by each of the
                                stockholders or members of a legal
                                entity in order for the legal entity to
                                be considered actively engaged in
                                farming.
1400 Subpart D Permitted       Renamed Subpart D Cash Rent Tenants.
 Entities.                     Removed all reference to permitted
Sec.   1400.301..............   entities and the requirements of
                                designation thereof for payment.
                               Clarified the cash rent tenant
                                requirements for joint operations and
                                entities.
                               Revised all references of individuals and
                                entities to persons and legal entities.
                               Redesignated from Sec.   1400.401.
1400 Subpart E Cash Rent       Redesignated Subpart E to Subpart D.
 Tenants.                      Redesignated Sec.   1400.401 to 1400.301.
Sec.   1400.401..............
1400 Subpart F Foreign         Redesignated Subpart F to Subpart E.
 Persons.                      Redesignated Sec.  Sec.   1400.501
Sec.  Sec.   1400.501 through   through 1400.502 to Sec.  Sec.
 1400.502.                      1400.401 through 1400.402.
                               Revised all references of individuals and
                                entities to persons and legal entities;
                                included revised standards for active
                                personal labor in the definition of
                                substantial contribution of active
                                personal labor.
1400 Subpart G Average         Redesignated Subpart G to Subpart F.
 Adjusted Gross Income.        Redesignated Sec.  Sec.   1400.600
Sec.   1400.600 through         through 1400.603 to Sec.  Sec.
 1400.603.                      1400.500 through 1400.503.
                               Revised (1) All references of individuals
                                and entities to persons and legal
                                entities;
                               (2) All references of 2003 through 2007
                                years of applicability to 2009 through
                                2012;
                               (3) All references of the $2.5 million
                                limitation to the three limitations--2
                                for commodity programs and one for
                                conservation programs; and
                               (4) The reference and application of the
                                test for farm income from 75 percent to
                                not less than 66.66 percent.
                               Included the revisions (1) The definition
                                and sources of income from farming,
                                ranching, forestry and related
                                activities and
                               (2) Ownership interest in entities will
                                be tracked through only four levels,
                                rather than six, for consistency with
                                the same number of levels as for direct
                                attribution of payments.
------------------------------------------------------------------------

Notice and Comment

    Section 1601 of the 2008 Farm Bill requires that these amendments 
be issued through an interim rule for the 2009 and subsequent crop, 
fiscal, or program years. This rule is effective on publication, but 
subject to modification after the consideration of comments. CCC will 
consider comments received during the comment period for this interim 
rule, which ends January 28, 2009. After the comment period closes, CCC 
will publish another document in the Federal Register. The document 
will include a discussion of any comments received during the comment 
period and any amendments made to the rule as a result of the comments.

Executive Order 12866

    The Office of Management and Budget (OMB) designated this interim 
rule as significant under Executive Order 12866. A cost-benefit 
assessment is summarized below and is available from the contact listed 
above.

Summary of Economic Impacts

    The 2008 Farm Bill makes significant changes in how USDA will 
administer payment limits and determine who is eligible for payments. 
Those changes will be implemented beginning with the 2009 crop, fiscal, 
or program year, as applicable. The most fundamental change in how 
payment limits are to be administered is that each member or owner of 
farming entities will be assigned a limit. The payment limits that 
applied to the entities themselves under the 2002 Farm Bill are 
retained. The motivation for this change is twofold:
    (1) Increase transparency by allocating payments made to farming 
entities to their members.
    (2) Moderate payments by adding another layer of payment limits. 
For example, the 2008 Farm Bill maintains payment limits on the 
corporations themselves and adds additional limits on the owners of 
farming corporations.
    USDA will be required to track payments made to entities, such as 
farming corporations, to the owners of those entities. Such tracking is 
called direct attribution. Both entities and their owners will now have 
payment limits. Direct attribution will involve extensive USDA staff 
resources, and consequently cost, in the implementation phase and has 
the potential for some reduction in Government outlays. Reductions in 
outlays will diminish as farmers reorganize their operations in order 
to capture the highest possible payments. Due to uncertainty about the 
costs it is difficult to estimate annual impacts.
    Other changes made in this interim rule are expected to result in 
little changes to Government outlays.

Regulatory Flexibility Act

    This rule is not subject to the Regulatory Flexibility Act since 
CCC is not required to publish a notice of proposed rulemaking for this 
rule. CCC is authorized by section 1601 of the 2008 Farm Bill to issue 
an interim rule effective on publication with an opportunity for 
comment.

[[Page 79273]]

Environmental Assessment

    The environmental impacts of this final rule have been considered 
in a manner consistent with the provisions of the National 
Environmental Policy Act (NEPA), 42 U.S.C. 4321-4347, the regulations 
of the Council on Environmental Quality (40 CFR Parts 1500-1508), and 
FSA's regulations for compliance with NEPA (7 CFR part 799). The 
changes to Payment Limitation and Payment Eligibility, required by the 
2008 Farm Bill that are identified in this rule, are non-discretionary. 
Therefore, FSA has determined that NEPA does not apply to this rule and 
no environmental assessment or environmental impact statement will be 
prepared.

Executive Order 12372

    This program is not subject to Executive Order 12372, which 
requires consultation with State and local officials. See the notice 
related to 7 CFR part 3015, subpart V, published in the Federal 
Register on June 24, 1983 (48 FR 29115).

Executive Order 12988

    The interim rule has been reviewed in accordance with Executive 
Order 12988. This rule is not retroactive and does not preempt State or 
local laws, regulations, or policies unless they present an 
irreconcilable conflict with this rule. Before any judicial action may 
be brought concerning the provisions of this rule the administrative 
appeal provisions of 7 CFR parts 11 and 780 must be exhausted.

Executive Order 13132

    The policies contained in this rule do not have any substantial 
direct effect on States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
rule impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States is not required.

Executive Order 13175

    The policies contained in this rule do not impose substantial 
unreimbursed direct compliance costs on Indian tribal governments or 
have tribal implications that preempt tribal law.

Unfunded Mandates

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandates Reform Act of 1995 
(UMRA) for State, local or tribal governments, or the private sector. 
In addition, CCC is not required to publish a notice of proposed 
rulemaking for this rule. Therefore, this rule is not subject to the 
requirements of sections 202 and 205 of UMRA.

Federal Assistance Programs

    The title and number of the Federal assistance programs in the 
Catalog of Federal Domestic Assistance to which this interim rule 
applies are:

10.055--Direct and Counter-Cyclical Payments Program.
10.069--Conservation Reserve Program.
10.072--Wetlands Reserve Program.
10.082--Tree Assistance Program.
10.912--Environmental Quality Incentives Program.
10.914--Wildlife Habitat Incentive Program.
10.917--Agricultural Management Assistance.
10.918--Ground and Surface Water Conservation--Environmental Quality 
Incentives Program.
10.920--Grassland Reserve Program.

    This interim rule also applies to the following Federal assistance 
programs that are not in the Catalog of Federal Domestic Assistance:
     ACRE,
     ELAP,
     LFP,
     LIP,
     SURE,
     AWEP,
     CBWP,
     CSTP,
     CCPI, and
     FRPP.

Paperwork Reduction Act

    The regulations in this rule are exempt from the requirements of 
the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in 
section 1601(c)(2) of the 2008 Farm Bill, which provides that these 
regulations be promulgated and the programs administered without regard 
to the Paperwork Reduction Act.

E-Government Act Compliance

    CCC is committed to complying with the E-Government Act, to promote 
the use of the Internet and other information technologies to provide 
increased opportunities for citizen access to Government information 
and services, and for other purposes.

List of Subjects in CFR Part 1400

    Agriculture, Loan programs--agriculture, Conservation, Price 
support programs.

0
For the reasons discussed above, this rule revises 7 CFR part 1400 to 
read as follows:

PART 1400--PAYMENT LIMITATION AND PAYMENT ELIGIBILITY FOR 2009 AND 
SUBSEQUENT CROP, PROGRAM, OR FISCAL YEARS

Subpart A--General Provisions
Sec.
1400.1 Applicability.
1400.2 Administration.
1400.3 Definitions.
1400.4 Indian Tribe.
1400.5 Denial of program benefits.
1400.6 Joint and several liability.
1400.7 Commensurate contributions and risk.
1400.8 Equitable treatment.
1400.9 Appeals.
Subpart B--Payment Limitation
1400.100 Revocable trust.
1400.101 Minor children.
1400.102 States, political subdivisions, agencies thereof.
1400.103 Charitable organizations.
1400.104 Changes in farming operations.
1400.105 Attribution of payments.
1400.106 Payment limits.
1400.107 Notification of interests.
Subpart C--Payment Eligibility
1400.201 General provisions for determining whether a person or 
legal entity is actively engaged in farming.
1400.202 Persons.
1400.203 Joint operations.
1400.204 Limited partnerships, limited liability partnerships, 
limited liability companies, corporations and other similar legal 
entities.
1400.205 Trusts.
1400.206 Estates.
1400.207 Landowners.
1400.208 Family members.
1400.209 Sharecroppers.
1400.210 Deceased and incapacitated persons.
1400.211 Persons and legal entities not considered to be actively 
engaged in farming.
1400.212 Growers of hybrid seed.
1400.213 Military personnel.
Subpart D--Cash Rent Tenants
1400.301 Eligibility.
Subpart E--Foreign Persons
1400.401 Eligibility.
1400.402 Notification.
Subpart F--Average Adjusted Gross Income Limitation
1400.500 Applicability.
1400.501 Determination of average adjusted gross income.
1400.502 Compliance and enforcement.
1400.503 Commensurate reduction.

    Authority: 7 U.S.C. 1308, 1308-1, 1308-2, 1308-3, 1308-3a, 1308-
4, and 1308-5.

Subpart A--General Provisions


Sec.  1400.1  Applicability.

    (a) This part, except as otherwise noted, is applicable to all of 
the following programs and any other

[[Page 79274]]

programs as provided in individual program regulations in this chapter 
(including, but not limited to, all price support programs in parts 
1421 and 1434 of this chapter):
    (1) The Direct and Counter-cyclical Program (DCP), including the 
Average Crop Revenue Election (ACRE), part 1412 of this chapter;
    (2) The Conservation Reserve Program (CRP), part 1410 of this 
chapter;
    (3) The Noninsured Crop Disaster Assistance Program (NAP), part 
1437 of this chapter;
    (4) The Supplemental Revenue Assistance Program (SURE), part 1480 
of this chapter;
    (5) The Livestock Forage Disaster Program (LFP), Livestock 
Indemnity Program (LIP), and the Emergency Assistance Program for 
Livestock, Honey Bees and Farm-raised Fish (ELAP), part 1439 of this 
chapter;
    (6) The Tree Assistance Program (TAP), part 783 of this title; and
    (7) The Natural Resource Conservation Service (NRCS) conservation 
programs of this title including Agricultural Management Assistance 
(AMA), Agricultural Water Enhancement Program (AWEP), Chesapeake Bay 
Watershed Program (CBWP), Conservation Stewardship Program (CSTP), 
Cooperative Conservation Partnership Initiative (CCPI), Environmental 
Quality Incentives Program (EQIP), Farm and Ranchland Protection 
Program (FRPP), Grasslands Reserve Program (GRP), Wetlands Reserve 
Program (WRP), and Wildlife Habitat Incentive Program (WHIP).
    (b) This part will apply to the programs specified in:
    (1) Paragraphs (a)(1), (3), (4), and (6) of this section on a crop 
year basis;
    (2) To the program in paragraph (a)(2) of this section on a fiscal 
year basis;
    (3) To the programs in paragraph (a)(5) of this section on a 
calendar year basis; and
    (4) To the programs in paragraph (a)(7) of this section based on 
available funding.
    (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 
provided in individual program regulations in this chapter.
    (d) Where more than one provision of this part may apply, the 
provision which 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.

------------------------------------------------------------------------
                                                  Limitation per person
                                                   or legal entity, per
               Payment or benefit                   crop, program, or
                                                       fiscal year
------------------------------------------------------------------------
(1) Direct Payments for covered commodities \1\                  $40,000
(2) Direct Payments for peanuts \1\............                   40,000
(3) CRP annual rental payments \2\.............                   50,000
(4) GRP........................................                   50,000
(5) WHIP.......................................                   50,000
(6) WRP........................................                   50,000
(7) Counter-Cyclical Payments for covered                         65,000
 commodities \3\...............................
(8) Counter-Cyclical Payments for peanuts \3\..                   65,000
(9) NAP payments...............................                  100,000
(10) Supplemental Agricultural Disaster                          100,000
 Assistance \4\................................
(11) TAP.......................................                  100,000
(12) CSTP \5\..................................                  200,000
(13) EQIP......................................                  300,000
------------------------------------------------------------------------
\1\ If the person or legal entity has a direct or indirect interest in
  payments earned on a farm that is in ACRE, this limitation will
  reflect a 20 percent reduction in direct payments on each farm that is
  participating in ACRE.
\2\ Limitation applicable only to CRP contracts approved prior to
  October 1, 2008.
\3\ Under ACRE, this amount will be a combined limitation for counter-
  cyclical and ACRE payments. If a person or legal entity has a direct
  or indirect interest in payments earned on a farm that is
  participating in ACRE, this limitation will reflect an increase for
  the amount that the direct payments were reduced.
\4\ Total payments received under Supplemental Agricultural Disaster
  Assistance through SURE, LIP, LFP, and ELAP may not exceed $100,000.
\5\ The $200,000 limit is the total limit for 2009 through 2012. Note:
  AMA, AWEP, CBWP, CCPI, and FRPP are all limited by available funding
  rather then an amount by participant.

    (g) With respect to contracts for conservation programs approved 
prior to October 1, 2008, the payment limitation rules in 7 CFR part 
1400 in effect on September 30, 2008 will be applicable (see 7 CFR part 
1400, revised as of January 1, 2008).


Sec.  1400.2  Administration.

    (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 such committee. The State committee may also:
    (1) Correct or require a county committee to correct any action 
taken by such 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.

[[Page 79275]]

    (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 such 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 
such year.
    (g) Initial determinations concerning the provisions of this part 
will not be made by a county FSA 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 such reviews is not subject to the time constraints 
specified in paragraph (f) of this section.


Sec.  1400.3  Definitions.

    (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 labor means personally providing physical 
activities necessary in a farming operation, including activities 
involved in land preparation, planting, cultivating, harvesting, and 
marketing of agricultural commodities in the farming operation. Other 
physical activities include those physical activities required to 
establish and maintain conserving cover crops on CRP acreages and those 
physical activities necessary in livestock operations.
    Active personal management means personally providing and 
participating in:
    (1) The general supervision and direction of activities and labor 
involved in the farming operation; or
    (2) Services (whether performed on-site or off-site) reasonably 
related and necessary to the farming operation, including:
    (i) Supervision of activities necessary in the farming operation, 
including activities involved in land preparation, planting, 
cultivating, harvesting, and marketing of agricultural commodities, as 
well as activities required to establish and maintain conserving cover 
crops on CRP acreage and activities required in livestock operations;
    (ii) Business-related actions, which include discretionary decision 
making;
    (iii) Evaluation of the financial condition and needs of the 
farming operation;
    (iv) Assistance in the structuring or preparation of financial 
reports or analyses for the farming operation;
    (v) Consultations in or structuring of business-related financing 
arrangements for the farming operation;
    (vi) Marketing and promotion of agricultural commodities produced 
by the farming operation;
    (vii) Acquiring technical information used in the farming 
operation; and
    (viii) Any other management function reasonably necessary to 
conduct the farming operation and for which service the farming 
operation would ordinarily be charged a fee.
    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 Farm Income means the average of the portion 
of adjusted gross income of the person or legal entity that is 
attributable to activities related to farming, ranching, or forestry 
for the 3 taxable years preceding the most immediately preceding 
complete taxable year.
    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.
    Average Adjusted Gross Nonfarm Income means the difference between 
the average adjusted gross income for the person or legal entity and 
the average adjusted gross farm income for the person or legal entity.
    Capital means the funding provided by a person or legal entity to 
the farming operation, independent and separate from all other farming 
operations, in order for such 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, 
such capital must have been derived from a fund or account separate and 
distinct from that of any other person or legal entity involved in such 
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.