Payment Limitation and Payment Eligibility, 52033-52041 [2020-18148]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 85, Number 164 (Monday, August 24, 2020)]
[Rules and Regulations]
[Pages 52033-52041]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18148]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1400

[Docket ID CCC-2019-0007]
RIN 0560-AI49


Payment Limitation and Payment Eligibility

AGENCY: Commodity Credit Corporation and Farm Service Agency, USDA.

ACTION: Final rule.

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SUMMARY: This rule implements the mandatory changes required by the 
Agriculture Improvement Act of 2018 (2018 Farm Bill) and other changes 
made by the Farm Service Agency (FSA) on behalf of CCC. Specifically, 
the mandatory changes update program applicability and payment 
limitations; and specify that the Secretary may approve a waiver of the 
average adjusted gross income (AGI) limitation for participants of 
certain conservation contracts administered by FSA and the Natural 
Resources Conservation Service (NRCS) on environmentally sensitive 
land. Also, the mandatory changes expand the definition of ``family 
member'' to include first cousins, nieces, and nephews. This rule also 
includes changes that make minor clarifications and updates throughout 
part 1400.

DATES: Effective: August 20, 2020.

FOR FURTHER INFORMATION CONTACT: Paul Hanson, telephone: (202) 720-
4189, email: [email protected]. Persons with disabilities who 
require alternative means for communication should contact the USDA 
Target Center at (202) 720-2600 (voice).

SUPPLEMENTARY INFORMATION:

Background

    This rule amends 7 CFR part 1400 to implement changes made by the 
2018 Farm Bill; (Pub. L. 115-334) as well as makes certain changes, as 
explained below. This rule updates the applicable programs and payment 
limitations in 7 CFR 1400.1 to reflect current policy and changes made 
by the 2018 Farm Bill. FSA administers the regulations in 7 CFR part 
1400 on behalf of CCC.

Payment Limitations

    The 2018 Farm Bill and this rule create two separate payment 
limitations for the Noninsured Crop Disaster Assistance Program (NAP). 
Previously, a person or legal entity was subject to a $125,000 payment 
limitation regardless of the level of NAP coverage obtained. For 2019 
and subsequent years, the 2018 Farm Bill provides a separate per crop 
year maximum per person and legal entity limitation of either $125,000 
for payments to those who purchased basic 50/55 NAP coverage or 
$300,000 for payments to those who purchased buy-up coverage. The 2018 
Farm Bill increased the payment limitation for the Emergency 
Conservation Program (ECP) to $500,000 per program per disaster event.
    The 2018 Farm Bill officially removed LDPs and MLGs from the 
combined payment limit. This rule removes the payment limits for 
Marketing Loan Gains (MLG), Loan Deficiency Payments (LDP), and the 
Emergency Assistance for Livestock, Honeybees and Farm Raised Fish 
Program (ELAP) as mandated by the 2018 Farm Bill (section 1703(a)(2) 
and section 1501(e) respectively).

Waiver of AGI Limitation for Environmentally Sensitive Land of Special 
Significance

    The 2018 Farm Bill does not change the AGI limitation of $900,000 
for certain programs; however, it does authorize the Secretary to waive 
the AGI limitation for participants of certain conservation contracts 
administered by FSA or NRCS when the Secretary determines that 
environmentally sensitive land of special significance will be 
protected because of the waiver. The waiver authority allows FSA and 
NRCS the discretion, on a case-by-case basis, to provide benefits to 
producers who may not otherwise meet the AGI

[[Page 52034]]

requirements on environmentally sensitive land of special significance. 
This rule defines ``environmentally sensitive land of special 
significance'' in Sec.  1400.3. FSA and the NRCS identified specific 
critical resources warranting protection through enrollment in its 
definition. This rule also adds provisions in Sec.  1400.500(f) to 
specify how a request for a waiver must be submitted and what it must 
include.

Definition of Family Member

    FSA is expanding the definition of ``family member'' as mandated by 
the 2018 Farm Bill to include first cousin, niece, and nephew. This 
change expands the definition to allow farming operations to qualify 
for additional payment limitations for an existing farming operation 
under the rules for a substantive change, which are specified in Sec.  
1400.104. Furthermore, joint operations that included a first cousin, 
niece, or nephew were previously determined to be farming operations 
comprised of non-family members. With this change, a joint operation 
comprised of the newly expanded definition of family members would no 
longer be subject to the limitation of members qualifying on a 
management contribution alone, which increases the number of additional 
individuals eligible for payment within joint operations comprised 
solely of family members.

Other Changes

    This rule makes several changes to the definitions in 7 CFR 1400.3. 
This rule amends the definitions of ``active personal management,'' and 
``significant contribution'' as it relates to management in 7 CFR 
1400.3 and removes the definitions of ``active personal management,'' 
``significant contribution of active personal management,'' and 
``significant contribution of the combination of active personal labor 
and active personal management'' previously in subpart G so that 
consistent definitions of the terms are used throughout part 1400. This 
rule also makes minor clarifications to the terms ``interest in the 
farming operation'' and ``lawful alien.''
    It adds a new definition of ``livestock'' for the purposes of part 
1400, for which ``livestock'' includes animals that are considered 
eligible livestock under the Livestock Indemnity Program (LIP). This 
change is intended to clarify which species qualify as livestock and 
ensure that the animals considered to be ``livestock'' under part 1400 
is consistent with the administration of other FSA programs.
    This rule moves the provisions for revocable trusts from Sec.  
1400.100 (subpart B, Payment Limitation) to Sec.  1400.7 (subpart A, 
General Provisions) because they are general provisions applicable to 
all of part 1400 and not just to the payment limitation provisions.
    This rule amends the provisions in Sec.  1400.102 to clarify that 
the policy that a state or political subdivision or one of its agencies 
is not eligible for payments or benefits under the programs in Sec.  
1400.1. This rule also clarifies that the exception in Sec.  
1400.102(b) applies only to payments or benefits under the Agriculture 
Risk Coverage (ARC) and Price Loss Coverage (PLC) programs.
    This rule amends Sec.  1400.104(a) to remove the reference to 
``legal entities.'' This change aligns the regulation with current 
language in the 2018 Farm Bill.
    This rule amends Sec.  1400.104(a)(3) to remove ``base acres'' and 
add ``land used for agricultural production.'' The addition of 20 
percent or more land used for agricultural production will be 
recognized as a substantive change in the farming operation and will 
take into consideration land used for annual crop production as well as 
grazing lands.
    This rule is making a change in amending Sec.  1400.104(a)(5) to 
specify that a change in ownership by sale or gift of livestock can be 
recognized as a substantive change in the farming operation, in 
addition to a sale or gift of land, which already exists in the rule, 
such that the sale or gift of livestock can result in the application 
of additional payment limits under 7 CFR part 1400. The addition of 
livestock as an element for consideration used in determining whether a 
substantive change has occurred takes into consideration all of the 
aspects of a farming operation including but not limited to land but 
also livestock and the value of the land or livestock to a farming 
operation. Further, this change is appropriate as substantive change 
rules apply to all programs subject to payment limitation, including 
Livestock Forage Disaster Program (LFP).
    This rule amends Sec.  1400.106 to specify that payment limitations 
apply to both direct and indirect payments, subject to the attribution 
provisions in Sec.  1400.105. This change is a clarification of and 
therefore codification of current policy and does not alter the way FSA 
applies payment limitations.
    This rule moves the cash rent tenant provisions of subpart D to 
subpart C, in Sec.  1400.214, which contains the payment eligibility 
requirements.
    This rule makes a technical correction to the provision in the 
regulation that indicated a legal entity's or joint operation's 
eligible capital, land, or equipment could not be acquired as a result 
of a loan made to, guaranteed by, cosigned by, or secured by any 
person, legal entity or joint operation that has an interest in the 
farming operation, including the legal entity's or joint operation's 
members. The technical correction removes the legal entity's or joint 
operation's members from the provision and relies on ``interest in the 
farming operation'' to define the qualifying contribution.
    This rule makes minor changes to update the regulatory language 
throughout part 1400. These changes are intended to make the regulation 
easier to understand and do not affect program implementation.

Effective Date, Notice and Comment, and Paperwork Reduction Act

    As specified in 7 U.S.C. 9091, the regulations to implement the 
provisions of Title I and the administration of Title I of the 2018 
Farm Bill are exempt from the notice and comment provisions of the 
Administrative Procedure Act (5 U.S.C. 553) and the Paperwork Reduction 
Act (in 44 U.S.C. chapter 35). Section 9091 further directs the 
Secretary to use the authority in 5 U.S.C. 808 related to congressional 
review and delay in the effective date.
    The Administrative Procedure Act (5 U.S.C.553) provides that the 
30-day delay in the effective date provision does not apply when the 
rule involves specified actions, including matters relating to 
benefits. This rule governs the eligibility provisions for programs 
providing benefits to farmers and ranchers and therefore that exemption 
applies to this rule.
    Therefore, this rule is effective upon publication in the Federal 
Register.

Executive Orders 12866, 13563, 13771 and 13777

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. The requirements in 
Executive Orders 12866 and 13563 for the analysis of costs and benefits 
apply to rules that are determined to be significant. Executive

[[Page 52035]]

Order 13777, ``Enforcing the Regulatory Reform Agenda,'' established a 
federal policy to alleviate unnecessary regulatory burdens on the 
American people.
    The Office of Management and Budget (OMB) designated this rule as 
significant under Executive Order 12866 and therefore, OMB reviewed 
this rule. The costs and benefits of this rule are summarized below. 
The full cost benefit analysis is available on regulations.gov.
    Executive Order 13771, ``Reducing Regulation and Controlling 
Regulatory Costs,'' requires that, in order to manage the costs 
required to comply with Federal regulations, that for every new 
significant or economically significant regulation issued, the new 
costs must be offset by savings from deregulatory actions. OMB guidance 
in M-17-21, dated April 5, 2017, specifies that ``transfers'' are not 
covered by Executive Order 13771.

Cost Benefit Analysis Summary

    The cost benefit analysis evaluated changes to payment limits and 
payment eligibility mandated by the 2018 Farm Bill along with two other 
changes the rule is making in the regulation. This rule implements 
those changes by amending the regulations in 7 CFR part 1400. We 
estimate that the changes will increase Farm Program outlays by about 
$21.2 million per year. The largest increases are from elimination of 
the payment limit for ELAP and a new separate payment limit for those 
producers who choose buy-up coverage under NAP.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA, 
Pub. L. 104-121), generally requires an agency to prepare a regulatory 
flexibility analysis of any rule whenever an agency is required by the 
Administrative Procedure Act or any other law to publish a proposed 
rule, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
This rule is not subject to the Regulatory Flexibility Act because USDA 
is not required by Administrative Procedure Act or any law to publish a 
proposed rule for this rulemaking.

Environmental Review

    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 
the FSA regulations for compliance with NEPA (7 CFR part 799). FSA has 
determined that the provisions identified in this final rule are 
administrative in nature, intended to clarify the mandatory 
requirements of the programs, as defined in the 2018 Farm Bill, and do 
not constitute a major Federal action that would significantly affect 
the quality of the human environment, individually or cumulatively. As 
this rule presents administrative clarifications only, it is 
categorically excluded under Sec.  799.31(3)(i)) issuing minor 
technical corrections to regulations, handbooks, and internal guidance, 
as well as amendments to them; therefore, FSA will not prepare an 
environmental assessment or environmental impact statement for this 
regulatory action.

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with State and local officials that 
would be directly affected by proposed Federal financial assistance. 
The objectives of the Executive Order are to foster an 
intergovernmental partnership and a strengthened Federalism, by relying 
on State and local processes for State and local government 
coordination and review of proposed Federal financial assistance and 
direct Federal development. For reasons specified in the final rule 
related notice to 7 CFR part 3015, subpart V (48 FR 29115, June 24, 
1983), the programs and activities within this rule are excluded from 
the scope of Executive Order 12372 which requires intergovernmental 
consultation with State and local officials.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, ``Civil 
Justice Reform.'' This rule will not preempt State or local laws, 
regulations, or policies unless they represent an irreconcilable 
conflict with this rule. The changes mandated by the 2018 Farm Bill 
were effective for the 2019 crop year. Other changes in this rule will 
not have retroactive effect. Before any judicial actions may be brought 
regarding the provisions of this rule, the administrative appeal 
provisions of 7 CFR parts 11 and 780 must be exhausted.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' The policies contained in this rule do not have any 
substantial direct effect on States, on the relationship between the 
Federal Government and the States, or on the distribution of power and 
responsibilities among the various levels of government, except as 
required by law. 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

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with Tribes on a government-to-government 
basis on policies that have Tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes.
    The USDA Office of Tribal Relations (OTR) has assessed the impact 
of this rule on Indian Tribes and determined that this rule does have 
significant Tribal implications. OTR has determined that further Tribal 
consultation under Executive Order 13175 is not required at this time.
    Tribal consultation for this rule was included in the 2018 Farm 
Bill consultation held on May 1-2, 2019, at the National Museum of 
American Indian, in Washington, DC, and on June 26-27, 2019, in Sparks, 
NV. The portion of the Tribal consultation relative to this rule was 
conducted by Bill Northey, USDA Under Secretary for the Farm Production 
and Conservation mission area, as part of the Title I session. No 
comments regarding this rule were raised.
    If a Tribe requests additional consultation, FSA and CCC will work 
with OTR to ensure meaningful consultation is provided where changes, 
additions, and modifications are not expressly mandated by law.

The Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 
104-4) requires Federal agencies to assess the effects of their 
regulatory actions of State, local, and Tribal governments or the 
private sector. Agencies generally must prepare a written statement, 
including cost benefits analysis, for proposed and final rules with 
Federal mandates that may

[[Page 52036]]

result in expenditures of $100 million or more in any 1 year for State, 
local or Tribal governments, in the aggregate, or to the private 
sector. UMRA generally requires agencies to consider alternatives and 
adopt the more cost effective or least burdensome alternative that 
achieves the objectives of the rule. This rule contains no Federal 
mandates, as defined in Title II of UMRA, for State, local and Tribal 
governments or the private sector. Therefore, this rule is not subject 
to the requirements of sections 202 and 205 of UMRA.

E-Government Act Compliance

    FSA and CCC are 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.

Federal Assistance Programs

    The title and number of the Federal Domestic Assistance Programs 
found in the Catalog of Federal Domestic Assistance to which this rule 
applies are:

10.051--Commodity Loans and Loan Deficiency Payments
10.069--Conservation Reserve Program
10.088--Livestock Indemnity Program
10.089--Livestock Forage Disaster Program
10.091--Emergency Assistance for Livestock, Honeybees, and Farm-
Raised Fish Program
10.092--Tree Assistance Program
10.113--Agriculture Risk Coverage
10.112--Price Loss Coverage
10.451--Noninsured Assistance
10.912--Environmental Quality Incentives Program
10.917--Agricultural Management Assistance

List of Subjects in 7 CFR Part 1400

    Agriculture, Grant programs--agriculture, Loan programs--
agriculture, Natural resources, Price support programs.

    For the reasons discussed above, CCC amends 7 CFR part 1400 as 
follows:

PART 1400--PAYMENT LIMITATION AND PAYMENT ELIGIBILITY

0
1. The authority citation continues to read as follows:

    Authority: 7 U.S.C. 1308, 1308-1, 1308-2, 1308-3, 1308-3a, 1308-
4, and 1308-5; and Title I, Pub. L. 115-123.

Subpart A--General Provisions

0
2. Amend Sec.  1400.1 as follows:
0
a. Revise paragraph (a)(1);
0
b. In paragraph (a)(6), remove the word ``and'';
0
c. In paragraph (a)(7), remove the period and add ``; and'' in its 
place;
0
d. Redesignate paragraph (a)(8) as paragraph (a)(9);
0
e. Add new paragraph (a)(8);
0
f. In newly redesignated paragraph (a)(9), remove the reference 
``Subparts C, D, and G'' and add ``Subparts C and G'' in its place and 
remove ``through (7)'' and add ``through (8)'' in its place;
0
g. In paragraph (b)(1), remove ``(5),'';
0
h. In paragraph (b)(3), remove the reference ``Paragraph (a)(6)'' and 
add the references ``Paragraphs (a)(5) and (6)'' in its place and 
remove the word ``and'' at the end of the paragraph;
0
i. In paragraph (b)(4), remove the period and add ``; and'' in its 
place;
0
j. Add paragraph (b)(5); and
0
k. Revise paragraph (f).
    The additions and revisions read as follows.


Sec.  1400.1   Applicability.

    (a) * * *
    (1) The Agriculture Risk Coverage (ARC) and Price Loss Coverage 
(PLC) Programs, part 1412 of this chapter;
* * * * *
    (8) The Emergency Conservation Program (ECP) and Emergency Forest 
Restoration Program (EFRP) in part 701 of this title.
* * * * *
    (b) * * *
    (5) Paragraph (a)(8) of this section on a per disaster event basis.
* * * * *
    (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)
------------------------------------------------------------------------
                                         Limitation per person or legal
          Payment or benefit                       entity ($)
------------------------------------------------------------------------
(1) Price Loss Coverage, Agriculture    125,000 per program year.
 Risk Coverage payments (other than
 Peanuts).
(2) Price Loss Coverage and             125,000 per program year.
 Agriculture Risk Coverage payments
 for Peanuts.
(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) CSP \1\...........................  200,000.
(7) EQIP \2\..........................  450,000.
(8) AMA program.......................  50,000 per fiscal year.
(9) ECP...............................  500,000 per disaster event.
(10) EFRP.............................  500,000 per disaster event.
------------------------------------------------------------------------
\1\ The $200,000 limitation is the total amount a person or legal entity
  can receive directly or indirectly in the aggregate under all CSP
  contracts entered into during fiscal years 2019 through 2023.
\2\ The $450,000 limitation is the total amount of cost share and
  incentive payments a person or legal entity can receive directly or
  indirectly, under all EQIP contracts (excluding Conservation Incentive
  Contracts) in the aggregate entered into during the period of either:
  Fiscal years 2014 through 2018, or fiscal years 2019 through 2023.

Sec.  1400.2   [Amended]

0
3. Amend Sec.  1400.2 as follows:
0
a. In paragraph (c) introductory text, remove the word ``such'' and add 
the words ``the county'' in its place;
0
b. In paragraph (c)(1), remove the word ``such'' and add the word 
``the'' in its place;
0
c. In paragraph (f), remove the words ``such determinations'' and add 
the words ``the determinations'' in their place and remove the words 
``such year'' and add the words ``the applicable year'' in their place; 
and
0
d. In paragraph (h), remove the words ``such reviews'' and add ``the 
reviews'' in their place.

[[Page 52037]]


0
4. Amend Sec.  1400.3(b) as follows:
0
a. Revise the definitions of ``Active personal management'' and 
``Capital'';
0
b. Add the definition of ``Environmentally sensitive land of special 
significance'' in alphabetical order;
0
c. In the definition of ``Equipment'', remove the words ``Such 
equipment'' and add the words ``The equipment'' in their place and 
remove the words ``such equipment'' each time they appear and add the 
words ``the equipment'' in their place;
0
d. In the definition of ``Family member'', remove the words ``spouse, 
or'' and add the words ``first cousin, niece, nephew, spouse, or'' in 
their place;
0
e. In the definition of ``Farming operation'', remove the words ``such 
person'' and add the words ``the person'' in their place;
0
g. Remove the definition of ``Interest in a farming operation'';
0
h. Add the definition of ``Interest in the farming operation'' in 
alphabetical order;
0
i. In the definition of ``Land'', remove the word ``Such'' and add the 
word ``The'' in its place, remove the words ``If such'' and add the 
words ``If the'' in their place, and remove the words ``crop or crop 
proceeds, such'' and add ``farming operation, the'' in their place;
0
j. In the definition of ``Lawful alien'', remove the words ``a valid 
Alien Registration Receipt Card'' and add the words ``appropriate valid 
credentials'' in their place;
0
k. Add the definition of ``Livestock'' in alphabetical order;
0
l. In the definition of ``Sharecropper'', remove the words ``such 
crop'' and add the words ``the crop'' in their place and remove the 
words ``the provision of such labor'' and add the word ``work'' in 
their place; and
0
m. Revise the definition of ``Significant contribution''.
    The additions and revisions read as follows:


Sec.  1400.3   Definitions.

* * * * *
    (b) * * *
    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.
* * * * *
    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.
* * * * *
    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.
* * * * *
    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.
* * * * *
    Livestock means those animals included in Sec.  1416.304(a) of this 
chapter.
* * * * *
    Significant contribution means the provision of the following to a 
farming operation:
    (1) Land, capital, or equipment:
    (i) 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:
    (A) Value of the capital necessary to conduct the farming 
operation;
    (B) Rental value of the land necessary to conduct the farming 
operation; or
    (C) Rental value of the equipment necessary to conduct the farming 
operation; or
    (ii) If the contribution by a person or legal entity consists of 
any combination of land, capital, and equipment, the 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.
    (2) For active personal labor, an amount contributed by a person or 
members, stockholders, or partners of a legal entity to the farming 
operation that is described by the smaller of the following:
    (i) 1,000 hours per calendar year; or
    (ii) 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.
    (3) For active personal management, includes activities performed 
by a person, with a direct or indirect ownership interest in the 
farming operation or a legal entity, 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.
    (4) With respect to a combination of active personal labor and 
active personal management, when neither contribution by itself meets 
the requirement of paragraphs (2) and (3) of this definition, a 
combination of active personal labor and active personal management 
that, when made together:

[[Page 52038]]

    (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 (4)(iii) of the Definition of Significant
                              Contribution
------------------------------------------------------------------------
   Combination of active personal labor and active personal management
           minimum requirement for a significant contribution
-------------------------------------------------------------------------
                                                     Meets the minimum
Management contribution   Labor contribution in        threshold for
        in hours                  hours                 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
------------------------------------------------------------------------

* * * * *

0
5. Amend Sec.  1400.5 as follows:
0
a. In paragraph (b) introductory text, remove the word ``Such'' and add 
the words ``Examples of'' in its place;
0
b. In paragraph (b)(3) introductory text, remove the words ``Indicators 
of such business arrangement'' and add the words ``Examples of business 
arrangements or acts'' in their place;
0
c. In paragraph (c), remove the words ``such person'' and add ``the 
person'' in their place, remove the words ``for such'' and add the word 
``the'' in their place, and add the words ``perpetrated or'' after the 
words ``device was''; and
0
d. Revise paragraph (d) introductory text.
    The revision reads as follows:


Sec.  1400.5   Denial of program benefits.

* * * * *
    (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:
* * * * *

0
5. Revise Sec.  1400.6(a) to read as follows:


Sec.  1400.6   Joint and several liability.

    (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 Sec.  1400.5, including amounts necessary to recover the 
payments.
* * * * *

0
6. Add Sec.  1400.7 to read as follows:


Sec.  1400.7   Revocable trust.

    A revocable trust and the grantor will be considered to be the same 
person under this part.


Sec.  1400.8   [Amended]

0
7. In Sec.  1400.8, remove the word ``such'' both times it appears and 
add the word ``the'' in its place.


Sec.  1400.9   [Amended]

0
8. In Sec.  1400.9(a) introductory text, remove the word ``such'' and 
add the word ``the'' in its place.

Subpart B--Payment Limitation


Sec.  1400.100   [Removed and Reserved]

0
9. Remove and reserve Sec.  1400.100.


Sec.  1400.101   [Amended]

0
10. Amend Sec.  1400.101 as follows:
0
a. In paragraph (a), remove the words ``such a'' and add the words 
``the'' in their place;
0
b. In paragraph (b)(2), remove the words ``such minor'' and add the 
words ``the minor'' in their place;
0
c. In paragraph (b)(3) introductory text, remove the word ``such'' and 
add the word ``the'' in its place; and
0
d. In paragraph (c), remove the word ``such'' and add the word ``the'' 
in its place.


Sec.  1400.102   [Amended]

0
11. Amend Sec.  1400.102 as follows:
0
a. In paragraph (a), remove the reference ``Sec.  1400.1(a)(1)'' and 
add ``Sec.  1400.1'' in its place;
0
b. In paragraph (b) introductory text, remove the reference ``Sec.  
1400.1'' and add the reference ``Sec.  1400.1(a)(1)'' in its place; and
0
c. In paragraph (c), remove the word ``such'' and add the word ``the'' 
in its place.


Sec.  1400.103   [Amended]

0
12. In Sec.  1400.103(a), remove the words ``such an'' and add the word 
``the'' in their place and remove the words ``such organization'' and 
add the words ``the organization'' in their place.


Sec.  1400.104   [Amended]

0
13. Amend Sec.  1400.104 as follows:
0
a. In paragraph (a) introductory text, remove the words ``or legal 
entities'';
0
b. In paragraph (a)(1), remove the words ``such an'' and add the word 
``the'' in their place;

[[Page 52039]]

0
c. In paragraph (a)(3) introductory text, remove the words ``base acres 
not'' and add the words ``land used for agricultural production not'' 
in their place and remove the words ``total base acres'' and add the 
words ``total land'' in their place;
0
d. In paragraph (a)(3)(i), remove the words ``such an increase in base 
acres'' and add ``the increase in agricultural land'' in their place;
0
e. In paragraph (a)(3)(ii), remove the words ``base acres'' and add the 
words ``agricultural land'' in their place;
0
f. In paragraph (a)(4), remove ``such'' each time it appears and add 
the word ``the'' in its place;
0
g. In paragraphs (a)(4)(i) through (iv), remove the comma and add a 
semicolon in its place;
0
h. In paragraph (a)(5) introductory text, add the words ``or 
livestock'' after the words ``gift of land'' both times they appear and 
remove the word ``such'' and add the word ``the'' in its place;
0
i. In paragraph (a)(5)(i), remove the words ``such land'' and add the 
words ``the land or livestock'' in their place and remove the comma and 
add a semicolon in its place;
0
j. In paragraph (a)(5)(ii), add the words ``or livestock'' after the 
words ``of land'', remove the words ``the land's fair'' and add the 
words ``land's or livestock's fair'' in their place, and remove the 
comma and add a semicolon in its place;
0
k. In paragraph (a)(5)(iii), remove the words ``the land'' and add the 
words ``the land or livestock'' in their place and remove ``such 
land,'' and add ``the land or livestock;'' in its place;
0
l. In paragraph (a)(5)(iv), remove the comma and add a semicolon in its 
place;
0
m. In paragraph (a)(5)(v), remove the words ``the land'' and add the 
words ``the land or livestock'' in their place; and
0
n. In paragraph (b), remove the words ``or legal entities''.


Sec.  1400.105   [Amended]

0
14. In Sec.  1400.105(d) introductory text, remove the words ``or legal 
entity's''.


Sec.  1400.106   [Amended]

0
15. In Sec.  1400.106(a), remove the words ``Payments'' and add the 
words ``Direct or indirect payments'' in its place and add the words 
``and will be determined in accordance with Sec.  1400.105'' at the end 
of the paragraph.

Subpart C--Payment Eligibility


Sec.  1400.201   [Amended]

0
16. Amend Sec.  1400.201 as follows:
0
a. In paragraph (a), remove the word ``such'' and add the word ``the'' 
in its place; and
0
b. In paragraph (d)(3), remove the words ``such a'' and add the word 
``the'' in their place.

0
17. Amend Sec.  1400.202 as follows:
0
a. In paragraph (c) introductory text, remove the words ``such 
capital'' and add the words ``the capital'' in their place; and
0
b. Revise paragraph (c)(1).
    The revision reads as follows:


Sec.  1400.202   Persons.

* * * * *
    (c) * * *
    (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
* * * * *

0
18. Amend Sec.  1400.203 as follows:
0
a. In paragraph (a)(1)(ii)(C), remove the word ``such'' and add the 
word ``the'' in its place;
0
b. In paragraph (b) introductory text, remove the word ``such'' and add 
the word ``the'' in its place both time it appears;
0
c. Revise paragraph (b)(1);
0
d. In paragraph (b)(2) introductory text, remove ``(a)(3)'' and add 
``(3)'' in its place and remove the words ``as defined''; and
0
e. In paragraph (c), remove ``(b)(3)'' and add ``(3)'' in its place and 
remove the word ``such'' to add the word ``the'' in its place.
    The revision reads as follows:


Sec.  1400.203   Joint operations.

* * * * *
    (b) * * *
    (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
* * * * *

0
19. Amend Sec.  1400.204 as follows:
0
a. In paragraph (a)(2)(iii), remove the word ``such'' and add the word 
``the'' in its place;
0
b. In paragraph (d) introductory text, remove the word ``such'' and add 
the word ``the'' in its place; and
0
c. Revise paragraph (d)(1).
    The revision reads as follows:


Sec.  1400.204   Limited partnerships, limited liability partnerships, 
limited liability companies, corporations, and other similar legal 
entities.

* * * * *
    (d) * * *
    (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
* * * * *

0
20. Amend Sec.  1400.205 as follows:
0
a. In paragraph (e) introductory text, remove the word ``such'' and add 
the word ``the'' in its place; and
0
b. Revise paragraph (e)(1).
    The revision reads as follows:


Sec.  1400.205   Trusts.

* * * * *
    (e) * * *
    (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
* * * * *

0
21. Amend Sec.  1400.206 as follows:
0
a. In paragraph (b) introductory text, remove the word ``such'' and add 
the word ``the'' in its place; and
0
b. Revise paragraph (b)(1).
    The revision reads as follows:


Sec.  1400.206   Estates.

* * * * *
    (b) * * *
    (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
* * * * *


Sec.  Sec.  1400.207, 1400.208, 1400.209, 1400.210, 1400.212, and 
1400.213   [Amended]

0
22. In Sec. Sec.  1400.207 through 1400.213, remove the word ``such'' 
and add the word ``the'' in its place in the following places:
0
a. In Sec.  1400.207(a) introductory text, (a)(1), and (b);
0
b. In Sec.  1400.208(b)(1) and (2);
0
c. In Sec.  1400.209(a) and (b)(2) and (3);
0
d. In Sec.  1400.210;
0
e. In Sec.  1400.212; and
0
f. In Sec.  1400.213.

[[Page 52040]]


0
23. Add Sec.  1400.214 to read as follows:


Sec.  1400.214   Cash rent tenants.

    (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 Sec.  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 Sec.  
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 Sec.  1400.204(a)(2) 
for the legal entity to be considered eligible for the program payments 
on the cash rented land.

Subpart D [Removed and Reserved]

0
24. Remove and reserve subpart D, consisting of Sec.  1400.301.

Subpart E--Foreign Persons


Sec.  1400.401   [Amended]

0
25. Amend Sec.  1400.401 as follows:
0
a. In paragraph (a), remove the words ``such person'' and add the words 
``the person'' in their place both times they appear, remove the words 
``such farm'' and add the words ``the farm'' in their place, remove the 
words ``such an'' and add the word ``that'' in their place, and remove 
``these regulations'' and adds ``the regulations in this subpart'' in 
its place;
0
b. In paragraph (b)(1), remove the words ``such a legal'' and add the 
words ``the legal'' in their place and remove the words ``such legal'' 
and add the words ``the legal'' in their place;
0
c. In paragraph (b)(2) introductory text, remove the word ``such'' and 
add the word ``the'' in its place;
0
d. In paragraph (b)(3), remove the words ``in such'' and add ``in'' in 
their place;
0
e. In paragraph (b)(4), remove the words ``in such'' and add the word 
``in'' in their place and remove the words ``such payment'' and add the 
words ``the payment'' in their place; and
0
f. In paragraph (b)(5), remove the words ``such percentage'' and add 
the words ``the percentage'' in their place, remove the words ``such 
stock'' and add the words ``the stock'' in their place, and remove the 
words ``such class'' and add the word ``class'' in their place.


Sec.  1400.402   [Amended]

0
26. Amend Sec.  1400.402 as follows:
0
a. In paragraph (a)(1), remove the word ``such'' and add the word 
``the'' in its place;
0
b. In paragraph (a)(2), remove the word ``Such'' and add the word 
``The'' in its place; and
0
c. In paragraph (b), remove the words ``Such written'' and add the word 
``Written'' in their place and remove ``such'' and add ``the'' in its 
place.

Subpart F--Average Adjusted Gross Income Limitation

0
27. Amend Sec.  1400.500 as follows:
0
a. In paragraph (c), remove the word ``such'' and add the word ``the'' 
in its place; and
0
b. Add paragraph (f).
    The addition reads as follows:


Sec.  1400.500   Applicability.

* * * * *
    (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.


Sec.  1400.501   [Amended]

0
28. Amend Sec.  1400.501 as follows:
0
a. In paragraph (a)(2), remove the word ``such'' and add the word 
``the'' in its place; and
0
b. In paragraph (b), remove the word ``such'' and add the word ``this'' 
in its place.


Sec.  1400.503   [Amended]

0
29. In Sec.  1400.503, remove the word ``such'' each time it appears 
and add the word ``the'' in its place.

Subpart G--Additional Payment Eligibility Provisions for Joint 
Operations and Legal Entities Comprised of Non-Family Members or 
Partners, Stockholders, or Persons With an Ownership Interest in 
the Farming Operation


Sec.  1400.601   [Removed and Reserved]

0
30. Remove and reserve Sec.  1400.601.


Sec.  1400.602   [Amended]

0
33. Amend Sec.  1400.602 as follows:
0
a. In paragraphs (a)(1) and (2) introductory text, remove the word 
``such'' each time it appears;
0
b. In paragraph (a)(3) introductory text, remove the words ``one such'' 
and add the word ``one'' in their place and remove the words ``with 
such'' and add the words ``with that'' in their place; and

[[Page 52041]]

0
c. In paragraphs (b) and (e), remove the word ``such'' each time it 
appears and add the word ``the'' in its place.

Richard Fordyce,
Administrator, Farm Service Agency.
Robert Stephenson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2020-18148 Filed 8-19-20; 4:15 pm]
BILLING CODE 3410-05-P