# Food, Conservation, and Energy Act of 2008/Title I/Subtitle A
## Subtitle A—Direct Payments and Counter-Cyclical Payments

       Sec. 1101. Base acres.
       Sec. 1102. Payment yields.
       Sec. 1103. Availability of direct payments.
       Sec. 1104. Availability of counter-cyclical payments.
       Sec. 1105. Average crop revenue election program.
       Sec. 1106. Producer agreement required as condition of provision of payments.
       Sec. 1107. Planting flexibility.
       Sec. 1108. Special rule for long grain and medium grain rice.
       Sec. 1109. Period of effectiveness.

### SEC. 1101. Base acres.

    (a) Adjustment of Base Acres.—
       (1) In general.—
          The Secretary shall provide for an adjustment, as appropriate, in the base acres for covered commodities for a farm whenever any of the following circumstances occurs:
             (A) A conservation reserve contract entered into under section 1231 of the Food Security Act of 1985 (16 U.S.C. 3831) with respect to the farm expires or is voluntarily terminated, or was terminated or expired during the period beginning on October 1, 2007, and ending on the date of enactment of this Act.
             (B) Cropland is released from coverage under a conservation reserve contract by the Secretary, or was released during the period beginning on October 1, 2007, and ending on the date of enactment of this Act.
             (C) The producer has eligible pulse crop acreage, which shall be determined in the same manner as eligible oilseed acreage under section 1101(a)(2) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911(a)(2)).
             (D) The producer has eligible oilseed acreage as the result of the Secretary designating additional oilseeds, which shall be determined in the same manner as eligible oilseed acreage under section 1101(a)(2) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911(a)(2)).
       (2) Special conservation reserve acreage payment rules.—
          For the crop year in which a base acres adjustment under subparagraph (A) or (B) of paragraph (1) is first made, the owner of the farm shall elect to receive either direct payments and counter-cyclical payments with respect to the acreage added to the farm under this subsection or a prorated payment under the conservation reserve contract, but not both.
    (b) Prevention of Excess Base Acres.—
       (1) Required reduction.—
          If the sum of the base acres for a farm, together with the acreage described in paragraph (2) exceeds the actual cropland acreage of the farm, the Secretary shall reduce the base acres for 1 or more covered commodities for the farm or the base acres for peanuts for the farm so that the sum of the base acres and acreage described in paragraph (2) does not exceed the actual cropland acreage of the farm.
       (2) Other acreage.—
          For purposes of paragraph (1), the Secretary shall include the following:
             (A) Any base acres for peanuts for the farm.
             (B) Any acreage on the farm enrolled in the conservation reserve program or wetlands reserve program under chapter 1 of subtitle D of title XII of the Food Security Act of 1985 (16 U.S.C. 3830 et seq.).
             (C) Any other acreage on the farm enrolled in a Federal conservation program for which payments are made in exchange for not producing an agricultural commodity on the acreage.
             (D) Any eligible pulse crop acreage, which shall be determined in the same manner as eligible oilseed acreage under section 1101(a)(2) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911(a)(2)).
             (E) If the Secretary designates additional oilseeds, any eligible oilseed acreage, which shall be determined in the same manner as eligible oilseed acreage under section 1101(a)(2) of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911(a)(2)).
       (3) Selection of acres.—
          The Secretary shall give the owner of the farm the opportunity to select the base acres for a covered commodity or the base acres for peanuts for the farm against which the reduction required by paragraph (1) will be made.
       (4) Exception for double-cropped acreage.—
          In applying paragraph (1), the Secretary shall make an exception in the case of double cropping, as determined by the Secretary.
       (5) Coordinated application of requirements.—
          The Secretary shall take into account section 1302(b) when applying the requirements of this subsection.
    (c) Reduction in Base Acres.—
       (1) Reduction at option of owner.—
          (A) In general.—
             The owner of a farm may reduce, at any time, the base acres for any covered commodity for the farm.
          (B) Effect of reduction.—
             A reduction under subparagraph (A) shall be permanent and made in a manner prescribed by the Secretary.
       (2) Required action by Secretary.—
          (A) In general.—
             The Secretary shall proportionately reduce base acres on a farm for covered commodities for land that has been subdivided and developed for multiple residential units or other nonfarming uses if the size of the tracts and the density of the subdivision is such that the land is unlikely to return to the previous agricultural use, unless the producers on the farm demonstrate that the land—
                (i) remains devoted to commercial agricultural production; or
                (ii) is likely to be returned to the previous agricultural use.
          (B) Requirement.—
             The Secretary shall establish procedures to identify land described in subparagraph (A).
       (3) Review and report.—
          Each year, to ensure, to the maximum extent practicable, that payments are received only by producers, the Secretary shall submit to Congress a report that describes the results of the actions taken under paragraph (2).
    (d) Treatment of farms with limited base acres.—
       (1) Prohibition on payments.—
          Except as provided in paragraph (2) and notwithstanding any other provision of this title, a producer on a farm may not receive direct payments, counter-cyclical payments, or average crop revenue election payments if the sum of the base acres of the farm is 10 acres or less, as determined by the Secretary.
       (2) Exceptions.—
          Paragraph (1) shall not apply to a farm owned by—
             (A) a socially disadvantaged farmer or rancher (as defined in section 355(e) of the Consolidated Farm and Rural Development Act (7 U.S.C. 2003(e)); or
             (B) a limited resource farmer or rancher, as defined by the Secretary.
       (3) Data collection and publication.—
          The Secretary shall—
             (A) collect and publish segregated data and survey information about the farm profiles, utilization of land, and crop production; and
             (B) perform an evaluation on the supply and price of fruits and vegetables based on the effects of suspension of base acres under this section.

### SEC. 1102. Payment yields.

    (a) Establishment and Purpose.—
       For the purpose of making direct payments and counter-cyclical payments under this subtitle, the Secretary shall provide for the establishment of a yield for each farm for any designated oilseed or eligible pulse crop for which a payment yield was not established under section 1102 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7912) in accordance with this section.
    (b) Payment Yields for Designated Oilseeds and Eligible Pulse Crops.—
       (1) Determination of average yield.—
          In the case of designated oilseeds and eligible pulse crops, the Secretary shall determine the average yield per planted acre for the designated oilseed or pulse crop on a farm for the 1998 through 2001 crop years, excluding any crop year in which the acreage planted to the designated oilseed or pulse crop was zero.
       (2) Adjustment for payment yield.—
          (A) In general.—
             The payment yield for a farm for a designated oilseed or eligible pulse crop shall be equal to the product of the following:
                (i) The average yield for the designated oilseed or pulse crop determined under paragraph (1).
                (ii) The ratio resulting from dividing the national average yield for the designated oilseed or pulse crop for the 1981 through 1985 crops by the national average yield for the designated oilseed or pulse crop for the 1998 through 2001 crops.
          (B) No national average yield information available.—
             To the extent that national average yield information for a designated oilseed or pulse crop is not available, the Secretary shall use such information as the Secretary determines to be fair and equitable to establish a national average yield under this section.
       (3) Use of partial county average yield.—
          If the yield per planted acre for a crop of a designated oilseed or pulse crop for a farm for any of the 1998 through 2001 crop years was less than 75 percent of the county yield for that designated oilseed or pulse crop, the Secretary shall assign a yield for that crop year equal to 75 percent of the county yield for the purpose of determining the average under paragraph (1).
       (4) No historic yield data available.—
          In the case of establishing yields for designated oilseeds and eligible pulse crops, if historic yield data is not available, the Secretary shall use the ratio for dry peas calculated under paragraph (2)(A)(ii) in determining the yields for designated oilseeds and eligible pulse crops, as determined to be fair and equitable by the Secretary.

### SEC. 1103. Availability of direct payments.

    (a) Payment required.—
       For each of the 2008 through 2012 crop years of each covered commodity (other than pulse crops), the Secretary shall make direct payments to producers on farms for which base acres and payment yields are established.
    (b) Payment Rate.—
       Except as provided in section 1105, the payment rates used to make direct payments with respect to covered commodities for a crop year shall be as follows:
          (1) Wheat, $0.52 per bushel.
          (2) Corn, $0.28 per bushel.
          (3) Grain sorghum, $0.35 per bushel.
          (4) Barley, $0.24 per bushel.
          (5) Oats, $0.024 per bushel.
          (6) Upland cotton, $0.0667 per pound.
          (7) Long grain rice, $2.35 per hundredweight.
          (8) Medium grain rice, $2.35 per hundredweight.
          (9) Soybeans, $0.44 per bushel.
          (10) Other oilseeds, $0.80 per hundredweight.
    (c) Payment amount.—
       The amount of the direct payment to be paid to the producers on a farm for a covered commodity for a crop year shall be equal to the product of the following:
          (1) The payment rate specified in subsection (b).
          (2) The payment acres of the covered commodity on the farm.
          (3) The payment yield for the covered commodity for the farm.
    (d) Time for payment.—
       (1) In general.—
          Except as provided in paragraph (2), in the case of each of the 2008 through 2012 crop years, the Secretary may not make direct payments before October 1 of the calendar year in which the crop of the covered commodity is harvested.
       (2) Advance payments.—
          (A) Option.—
             (i) In general.—
                At the option of the producers on a farm, the Secretary shall pay in advance up to 22 percent of the direct payment for a covered commodity for any of the 2008 through 2011 crop years to the producers on a farm.
             (ii) 2008 crop year.—
                If the producers on a farm elect to receive advance direct payments under clause (i) for a covered commodity for the 2008 crop year, as soon as practicable after the election, the Secretary shall make the advance direct payment to the producers on the farm.
          (B) Month.—
             (i) Selection.—
                Subject to clauses (ii) and (iii), the producers on a farm shall select the month during which the advance payment for a crop year will be made.
             (ii) Options.—
                The month selected may be any month during the period—
                   (I) beginning on December 1 of the calendar year before the calendar year in which the crop of the covered commodity is harvested; and
                   (II) ending during the month within which the direct payment would otherwise be made.
             (iii) Change.—
                The producers on a farm may change the selected month for a subsequent advance payment by providing advance notice to the Secretary.
       (3) Repayment of advance payments.—
          If a producer on a farm that receives an advance direct payment for a crop year ceases to be a producer on that farm, or the extent to which the producer shares in the risk of producing a crop changes, before the date the remainder of the direct payment is made, the producer shall be responsible for repaying the Secretary the applicable amount of the advance payment, as determined by the Secretary.

### SEC. 1104. Availability of counter-cyclical payments.

    (a) Payment required.—
       Except as provided in section 1105, for each of the 2008 through 2012 crop years for each covered commodity, the Secretary shall make counter-cyclical payments to producers on farms for which payment yields and base acres are established with respect to the covered commodity if the Secretary determines that the effective price for the covered commodity is less than the target price for the covered commodity.
    (b) Effective Price.—
       (1) Covered commodities other than rice.—
          Except as provided in paragraph (2), for purposes of subsection (a), the effective price for a covered commodity is equal to the sum of the following:
             (A) The higher of the following:
                (i) The national average market price received by producers during the 12-month marketing year for the covered commodity, as determined by the Secretary.
                (ii) The national average loan rate for a marketing assistance loan for the covered commodity in effect for the applicable period under subtitle B.
             (B) The payment rate in effect for the covered commodity under section 1103 for the purpose of making direct payments with respect to the covered commodity.
       (2) Rice.—
          In the case of long grain rice and medium grain rice, for purposes of subsection (a), the effective price for each type or class of rice is equal to the sum of the following:
             (A) The higher of the following:
                (i) The national average market price received by producers during the 12-month marketing year for the type or class of rice, as determined by the Secretary.
                (ii) The national average loan rate for a marketing assistance loan for the type or class of rice in effect for the applicable period under subtitle B.
             (B) The payment rate in effect for the type or class of rice under section 1103 for the purpose of making direct payments with respect to the type or class of rice.
    (c) Target Price.—
       (1) 2008 Crop year.—
          For purposes of the 2008 crop year, the target prices for covered commodities shall be as follows:
             (A) Wheat, $3.92 per bushel.
             (B) Corn, $2.63 per bushel.
             (C) Grain sorghum, $2.57 per bushel.
             (D) Barley, $2.24 per bushel.
             (E) Oats, $1.44 per bushel.
             (F) Upland cotton, $0.7125 per pound.
             (G) Long grain rice, $10.50 per hundredweight.
             (H) Medium grain rice, $10.50 per hundredweight.
             (I) Soybeans, $5.80 per bushel.
             (J) Other oilseeds, $10.10 per hundredweight.
       (2) 2009 Crop year.—
          For purposes of the 2009 crop year, the target prices for covered commodities shall be as follows:
             (A) Wheat, $3.92 per bushel.
             (B) Corn, $2.63 per bushel.
             (C) Grain sorghum, $2.57 per bushel.
             (D) Barley, $2.24 per bushel.
             (E) Oats, $1.44 per bushel.
             (F) Upland cotton, $0.7125 per pound.
             (G) Long grain rice, $10.50 per hundredweight.
             (H) Medium grain rice, $10.50 per hundredweight.
             (I) Soybeans, $5.80 per bushel.
             (J) Other oilseeds, $10.10 per hundredweight.
             (K) Dry peas, $8.32 per hundredweight.
             (L) Lentils, $12.81 per hundredweight.
             (M) Small chickpeas, $10.36 per hundredweight.
             (N) Large chickpeas, $12.81 per hundredweight.
       (3) Subsequent crop years.—
          For purposes of each of the 2010 through 2012 crop years, the target prices for covered commodities shall be as follows:
             (A) Wheat, $4.17 per bushel.
             (B) Corn, $2.63 per bushel.
             (C) Grain sorghum, $2.63 per bushel.
             (D) Barley, $2.63 per bushel.
             (E) Oats, $1.79 per bushel.
             (F) Upland cotton, $0.7125 per pound.
             (G) Long grain rice, $10.50 per hundredweight.
             (H) Medium grain rice, $10.50 per hundredweight.
             (I) Soybeans, $6.00 per bushel.
             (J) Other oilseeds, $12.68 per hundredweight.
             (K) Dry peas, $8.32 per hundredweight.
             (L) Lentils, $12.81 per hundredweight.
             (M) Small chickpeas, $10.36 per hundredweight.
             (N) Large chickpeas, $12.81 per hundredweight.
    (d) Payment rate.—
       The payment rate used to make counter-cyclical payments with respect to a covered commodity for a crop year shall be equal to the difference between—
          (1) the target price for the covered commodity; and
          (2) the effective price determined under subsection (b) for the covered commodity.
    (e) Payment amount.—
       If counter-cyclical payments are required to be paid under this section for any of the 2008 through 2012 crop years of a covered commodity, the amount of the counter-cyclical payment to be paid to the producers on a farm for that crop year shall be equal to the product of the following:
          (1) The payment rate specified in subsection (d).
          (2) The payment acres of the covered commodity on the farm.
          (3) The payment yield for the covered commodity for the farm.
    (f) Time for Payments.—
       (1) General rule.—
          Except as provided in paragraph (2), if the Secretary determines under subsection (a) that counter-cyclical payments are required to be made under this section for the crop of a covered commodity, beginning October 1, or as soon as practicable thereafter, after the end of the marketing year for the covered commodity, the Secretary shall make the counter-cyclical payments for the crop.
       (2) Availability of partial payments.—
          (A) In general.—
             If, before the end of the 12-month marketing year for a covered commodity, the Secretary estimates that counter-cyclical payments will be required for the crop of the covered commodity, the Secretary shall give producers on a farm the option to receive partial payments of the counter-cyclical payment projected to be made for that crop of the covered commodity.
          (B) Election.—
             (i) In general.—
                The Secretary shall allow producers on a farm to make an election to receive partial payments for a covered commodity under subparagraph (A) at any time but not later than 60 days prior to the end of the marketing year for that covered commodity.
             (ii) Date of issuance.—
                The Secretary shall issue the partial payment after the date of an announcement by the Secretary but not later than 30 days prior to the end of the marketing year.
       (3) Time for partial payments.—
          When the Secretary makes partial payments for a covered commodity for any of the 2008 through 2010 crop years—
             (A) the first partial payment shall be made after completion of the first 180 days of the marketing year for the covered commodity; and
             (B) the final partial payment shall be made beginning October 1, or as soon as practicable thereafter, after the end of the applicable marketing year for the covered commodity.
       (4) Amount of partial payment.—
          (A) First partial payment.—
             For each of the 2008 through 2010 crops of a covered commodity, the first partial payment under paragraph (3) to the producers on a farm may not exceed 40 percent of the projected counter-cyclical payment for the covered commodity for the crop year, as determined by the Secretary.
          (B) Final payment.—
             The final payment for a covered commodity for a crop year shall be equal to the difference between—
                (i) the actual counter-cyclical payment to be made to the producers for the covered commodity for that crop year; and
                (ii) the amount of the partial payment made to the producers under subparagraph (A).
       (5) Repayment.—
          The producers on a farm that receive a partial payment under this subsection for a crop year shall repay to the Secretary the amount, if any, by which the total of the partial payments exceed the actual counter-cyclical payment to be made for the covered commodity for that crop year.

### SEC. 1105. Average crop revenue election program.

    (a) Availability and election of alternative approach.—
       (1) Availability of average crop revenue election payments.—
          As an alternative to receiving counter-cyclical payments under section 1104 or 1304 and in exchange for a 20-percent reduction in direct payments under section 1103 or 1303 and a 30-percent reduction in marketing assistance loan rates under section 1202 or 1307, with respect to all covered commodities and peanuts on a farm, during each of the 2009, 2010, 2011, and 2012 crop years, the Secretary shall give the producers on the farm an opportunity to make an irrevocable election to instead receive average crop revenue election (referred to in this section as “ACRE”) payments under this section for the initial crop year for which the election is made through the 2012 crop year.
       (2) Limitation.—
          (A) In general.—
             The total number of planted acres for which the producers on a farm may receive ACRE payments under this section may not exceed the total base acreage for all covered commodities and peanuts on the farm.
          (B) Election.—
             If the total number of planted acres to all covered commodities and peanuts of the producers on a farm exceeds the total base acreage of the farm, the producers on the farm may choose which planted acres to enroll in the program under this section.
       (3) Election; time for election.—
          (A) In general.—
             The Secretary shall provide notice to producers regarding the opportunity to make each of the elections described in paragraph (1).
          (B) Notice requirements.—
             The notice shall include—
                (i) notice of the opportunity of the producers on a farm to make the election; and
                (ii) information regarding the manner in which the election must be made and the time periods and manner in which notice of the election must be submitted to the Secretary.
       (4) Election deadline.—
          Within the time period and in the manner prescribed pursuant to paragraph (3), all of the producers on a farm shall submit to the Secretary notice of an election made under paragraph (1).
       (5) Effect of failure to make election.—
          If all of the producers on a farm fail to make an election under paragraph (1), make different elections under paragraph (1), or fail to timely notify the Secretary of the election made, as required by paragraph (4), all of the producers on the farm shall be deemed to have made the election to receive counter-cyclical payments under section 1104 or 1304 for all covered commodities and peanuts on the farm, and to otherwise not have made the election described in paragraph (1), for the applicable crop years.
    (b) Payments required.—
       (1) In general.—
          In the case of producers on a farm who make an election under subsection (a) to receive ACRE payments for any of the 2009 through 2012 crop years for all covered commodities and peanuts, the Secretary shall make ACRE payments available to the producers on a farm in accordance with this subsection.
       (2) ACRE payment.—
          (A) In general.—
             Subject to paragraph (3), in the case of producers on a farm described in paragraph (1), the Secretary shall make ACRE payments available to the producers on a farm for each crop year if—
                (i) the actual State revenue for the crop year for the covered commodity or peanuts in the State determined under subsection (c); is less than
                (ii) the ACRE program guarantee for the crop year for the covered commodity or peanuts in the State determined under subsection (d).
          (B) Individual loss.—
             The Secretary shall make ACRE payments available to the producers on a farm in a State for a crop year only if (as determined by the Secretary)—
                (i) the actual farm revenue for the crop year for the covered commodity or peanuts, as determined under subsection (e); is less than
                (ii) the farm ACRE benchmark revenue for the crop year for the covered commodity or peanuts, as determined under subsection (f).
       (3) Time for payments.—
          In the case of each of the 2009 through 2012 crop years, the Secretary shall make ACRE payments beginning October 1, or as soon as practicable thereafter, after the end of the applicable marketing year for the covered commodity or peanuts.
    (c) Actual State revenue.—
       (1) In general.—
          For purposes of subsection (b)(2)(A), the amount of the actual State revenue for a crop year of a covered commodity or peanuts shall equal the product obtained by multiplying—
             (A) the actual State yield for each planted acre for the crop year for the covered commodity or peanuts determined under paragraph (2); and
             (B) the national average market price for the crop year for the covered commodity or peanuts determined under paragraph (3).
       (2) Actual State yield.—
          For purposes of paragraph (1)(A), the actual State yield for each planted acre for a crop year for a covered commodity or peanuts in a State shall equal (as determined by the Secretary)—
             (A) the quantity of the covered commodity or peanuts that is produced in the State during the crop year; divided by
             (B) the number of acres that are planted to the covered commodity or peanuts in the State during the crop year.
       (3) National average market price.—
          For purposes of paragraph (1)(B), the national average market price for a crop year for a covered commodity or peanuts in a State shall equal the greater of—
             (A) the national average market price received by producers during the 12-month marketing year for the covered commodity or peanuts, as determined by the Secretary; or
             (B) the marketing assistance loan rate for the covered commodity or peanuts under section 1202 or 1307, as reduced under subsection (a)(1).
    (d) ACRE program guarantee.—
       (1) Amount.—
          (A) In general.—
             For purposes of subsection (b)(2)(A) and subject to subparagraph (B), the ACRE program guarantee for a crop year for a covered commodity or peanuts in a State shall equal 90 percent of the product obtained by multiplying—
                (i) the benchmark State yield for each planted acre for the crop year for the covered commodity or peanuts in a State determined under paragraph (2); and
                (ii) the ACRE program guarantee price for the crop year for the covered commodity or peanuts determined under paragraph (3).
          (B) Minimum and maximum guarantee.—
             In the case of each of the 2010 through 2012 crop years, the ACRE program guarantee for a crop year for a covered commodity or peanuts under subparagraph (A) shall not decrease or increase more than 10 percent from the guarantee for the preceding crop year.
       (2) Benchmark State yield.—
          (A) In general.—
             For purposes of paragraph (1)(A)(i), subject to subparagraph (B), the benchmark State yield for each planted acre for a crop year for a covered commodity or peanuts in a State shall equal the average yield per planted acre for the covered commodity or peanuts in the State for the most recent 5 crop year yields, excluding each of the crop years with the highest and lowest yields, using National Agricultural Statistics Service data.
          (B) Assigned yield.—
             If the Secretary cannot establish the benchmark State yield for each planted acre for a crop year for a covered commodity or peanuts in a State in accordance with subparagraph (A) or if the yield determined under subparagraph (A) is an unrepresentative average yield for the State (as determined by the Secretary), the Secretary shall assign a benchmark State yield for each planted acre for the crop year for the covered commodity or peanuts in the State on the basis of—
                (i) previous average yields for a period of 5 crop years, excluding each of the crop years with the highest and lowest yields; or
                (ii) benchmark State yields for planted acres for the crop year for the covered commodity or peanuts in similar States.
       (3) ACRE program guarantee price.—
          For purposes of paragraph (1)(A)(ii), the ACRE program guarantee price for a crop year for a covered commodity or peanuts in a State shall be the simple average of the national average market price received by producers of the covered commodity or peanuts for the most recent 2 crop years, as determined by the Secretary.
       (4) States with irrigated and nonirrigated land.—
          In the case of a State in which at least 25 percent of the acreage planted to a covered commodity or peanuts in the State is irrigated and at least 25 percent of the acreage planted to the covered commodity or peanuts in the State is not irrigated, the Secretary shall calculate a separate ACRE program guarantee for the irrigated and nonirrigated areas of the State for the covered commodity or peanuts.
    (e) Actual farm revenue.—
       For purposes of subsection (b)(2)(B)(i), the amount of the actual farm revenue for a crop year for a covered commodity or peanuts shall equal the amount determined by multiplying—
          (1) the actual yield for the covered commodity or peanuts of the producers on the farm; and
          (2) the national average market price for the crop year for the covered commodity or peanuts determined under subsection (c)(3).
    (f) Farm ACRE benchmark revenue.—
       For purposes of subsection (b)(2)(B)(ii), the farm ACRE benchmark revenue for the crop year for a covered commodity or peanuts shall equal the sum obtained by adding—
          (1) the amount determined by multiplying—
             (A) the average yield per planted acre for the covered commodity or peanuts of the producers on the farm for the most recent 5 crop years, excluding each of the crop years with the highest and lowest yields; and
             (B) the ACRE program guarantee price for the applicable crop year for the covered commodity or peanuts in a State determined under subsection (d)(3); and
          (2) the amount of the per acre crop insurance premium required to be paid by the producers on the farm for the applicable crop year for the covered commodity or peanuts on the farm.
    (g) Payment amount.—
       If ACRE payments are required to be paid for any of the 2009 through 2012 crop years of a covered commodity or peanuts under this section, the amount of the ACRE payment to be paid to the producers on the farm for the crop year under this section shall be equal to the product obtained by multiplying—
          (1) the lesser of—
             (A) the difference between—
                (i) the ACRE program guarantee for the crop year for the covered commodity or peanuts in the State determined under subsection (d); and
                (ii) the actual State revenue from the crop year for the covered commodity or peanuts in the State determined under subsection (c); and
             (B) 25 percent of the ACRE program guarantee for the crop year for the covered commodity or peanuts in the State determined under subsection (d);
          (2)
             (A) for each of the 2009 through 2011 crop years, 83.3 percent of the acreage planted or considered planted to the covered commodity or peanuts for harvest on the farm in the crop year; and
             (B) for the 2012 crop year, 85 percent of the acreage planted or considered planted to the covered commodity or peanuts for harvest on the farm in the crop year; and
          (3) the quotient obtained by dividing—
             (A) the average yield per planted acre for the covered commodity or peanuts of the producers on the farm for the most recent 5 crop years, excluding each of the crop years with the highest and lowest yields; by
             (B) the benchmark State yield for the crop year, as determined under subsection (d)(2).

### SEC. 1106. Producer agreement required as condition of provision of payments.

    (a) Compliance With Certain Requirements.—
       (1) Requirements.—
          Before the producers on a farm may receive direct payments, counter-cyclical payments, or average crop revenue election payments with respect to the farm, the producers shall agree, during the crop year for which the payments are made and in exchange for the payments—
             (A) to comply with applicable conservation requirements under subtitle B of title XII of the Food Security Act of 1985 (16 U.S.C. 3811 et seq.);
             (B) to comply with applicable wetland protection requirements under subtitle C of title XII of that Act (16 U.S.C. 3821 et seq.);
             (C) to comply with the planting flexibility requirements of section 1107;
             (D) to use the land on the farm, in a quantity equal to the attributable base acres for the farm and any base acres for peanuts for the farm under subtitle C, for an agricultural or conserving use, and not for a nonagricultural commercial, industrial, or residential use, as determined by the Secretary; and
             (E) to effectively control noxious weeds and otherwise maintain the land in accordance with sound agricultural practices, as determined by the Secretary, if the agricultural or conserving use involves the noncultivation of any portion of the land referred to in subparagraph (D).
       (2) Compliance.—
          The Secretary may issue such rules as the Secretary considers necessary to ensure producer compliance with the requirements of paragraph (1).
       (3) Modification.—
          At the request of the transferee or owner, the Secretary may modify the requirements of this subsection if the modifications are consistent with the objectives of this subsection, as determined by the Secretary.
    (b) Transfer or Change of Interest in Farm.—
       (1) Termination.—
          (A) In general.—
             Except as provided in paragraph (2), a transfer of (or change in) the interest of the producers on a farm in base acres for which direct payments or counter-cyclical payments are made, or on which average crop revenue election payments are based, shall result in the termination of the direct payments, counter-cyclical payments, or average crop revenue election payments to the extent the payments are made or based on the base acres, unless the transferee or owner of the acreage agrees to assume all obligations under subsection (a).
          (B) Effective date.—
             The termination shall take effect on the date determined by the Secretary.
       (2) Exception.—
          If a producer entitled to a direct payment, counter-cyclical payment, or average crop revenue election payment dies, becomes incompetent, or is otherwise unable to receive the payment, the Secretary shall make the payment, in accordance with rules issued by the Secretary.
    (c) Reports.—
       (1) Acreage reports.—
          As a condition on the receipt of any benefits under this subtitle or subtitle B, the Secretary shall require producers on a farm to submit to the Secretary annual acreage reports with respect to all cropland on the farm.
       (2) Production reports.—
          As a condition on the receipt of any benefits under this subtitle or subtitle B, the Secretary shall require producers on a farm that receive payments under section 1105 to submit to the Secretary annual production reports with respect to all covered commodities and peanuts produced on the farm.
       (3) Penalties.—
          No penalty with respect to benefits under this subtitle or subtitle B shall be assessed against the producers on a farm for an inaccurate acreage or production report unless the producers on the farm knowingly and willfully falsified the acreage or production report.
    (d) Tenants and Sharecroppers.—
       In carrying out this subtitle, the Secretary shall provide adequate safeguards to protect the interests of tenants and sharecroppers.
    (e) Sharing of Payments.—
       The Secretary shall provide for the sharing of direct payments, counter-cyclical payments, or average crop revenue election payments among the producers on a farm on a fair and equitable basis.

### SEC. 1107. Planting flexibility.

    (a) Permitted Crops.—
       Subject to subsection (b), any commodity or crop may be planted on base acres on a farm.
    (b) Limitations Regarding Certain Commodities.—
       (1) General limitation.—
          The planting of an agricultural commodity specified in paragraph (3) shall be prohibited on base acres unless the commodity, if planted, is destroyed before harvest.
       (2) Treatment of trees and other perennials.—
          The planting of an agricultural commodity specified in paragraph (3) that is produced on a tree or other perennial plant shall be prohibited on base acres.
       (3) Covered agricultural commodities.—
          Paragraphs (1) and (2) apply to the following agricultural commodities:
          (A) Fruits.
          (B) Vegetables (other than mung beans and pulse crops).
          (C) Wild rice.
    (c) Exceptions.—
       Paragraphs (1) and (2) of subsection (b) shall not limit the planting of an agricultural commodity specified in paragraph (3) of that subsection—
          (1) in any region in which there is a history of double-cropping of covered commodities with agricultural commodities specified in subsection (b)(3), as determined by the Secretary, in which case the double-cropping shall be permitted;
          (2) on a farm that the Secretary determines has a history of planting agricultural commodities specified in subsection (b)(3) on base acres, except that direct payments and counter-cyclical payments shall be reduced by an acre for each acre planted to such an agricultural commodity; or
          (3) by the producers on a farm that the Secretary determines has an established planting history of a specific agricultural commodity specified in subsection (b)(3), except that—
             (A) the quantity planted may not exceed the average annual planting history of such agricultural commodity by the producers on the farm in the 1991 through 1995 or 1998 through 2001 crop years (excluding any crop year in which no plantings were made), as determined by the Secretary; and
             (B) direct payments and counter-cyclical payments shall be reduced by an acre for each acre planted to such agricultural commodity.
    (d) Planting Transferability Pilot Project.—
       (1) Pilot project authorized.—
          Notwithstanding paragraphs (1) and (2) of subsection (b) and in addition to the exceptions provided in subsection (c), the Secretary shall carry out a pilot project to permit the planting of cucumbers, green peas, lima beans, pumpkins, snap beans, sweet corn, and tomatoes grown for processing on base acres during each of the 2009 through 2012 crop years.
       (2) Pilot project States and acres.—
          The number of base acres eligible during each crop year for the pilot project under paragraph (1) shall be—
             (A) 9,000 acres in the State of Illinois;
             (B) 9,000 acres in the State of Indiana;
             (C) 1,000 acres in the State of Iowa;
             (D) 9,000 acres in the State of Michigan;
             (E) 34,000 acres in the State of Minnesota;
             (F) 4,000 acres in the State of Ohio; and
             (G) 9,000 acres in the State of Wisconsin.
       (3) Contract and management requirements.—
          To be eligible for selection to participate in the pilot project, the producers on a farm shall—
             (A) demonstrate to the Secretary that the producers on the farm have entered into a contract to produce a crop of a commodity specified in paragraph (1) for processing;
             (B) agree to produce the crop as part of a program of crop rotation on the farm to achieve agronomic and pest and disease management benefits; and
             (C) provide evidence of the disposition of the crop.
       (4) Temporary reduction in base acres.—
          The base acres on a farm for a crop year shall be reduced by an acre for each acre planted under the pilot program.
       (5) Duration of reductions.—
          The reduction in the base acres of a farm for a crop year under paragraph (4) shall expire at the end of the crop year.
       (6) Recalculation of base acres.—
          (A) In general.—
             If the Secretary recalculates base acres for a farm while the farm is included in the pilot project, the planting and production of a crop of a commodity specified in paragraph (1) on base acres for which a temporary reduction was made under this section shall be considered to be the same as the planting and production of a covered commodity.
          (B) Prohibition.—
             Nothing in this paragraph provides authority for the Secretary to recalculate base acres for a farm.
       (7) Pilot impact evaluation.—
          (A) In general.—
             The Secretary shall periodically evaluate the pilot project conducted under this subsection to determine the effects of the pilot project on the supply and price of—
                (i) fresh fruits and vegetables; and
                (ii) fruits and vegetables for processing.
          (B) Determination.—
             An evaluation under subparagraph (A) shall include a determination as to whether—
                (i) producers of fresh fruits and vegetables are being negatively impacted; and
                (ii) existing production capacities are being supplanted.
          (C) Report.—
             As soon as practicable after conducting an evaluation under subparagraph (A), the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a report that describes the results of the evaluation.

### SEC. 1108. Special rule for long grain and medium grain rice.

    (a) Calculation Method.—
       Subject to subsections (b) and (c), for the purposes of determining the amount of the counter-cyclical payments to be paid to the producers on a farm for long grain rice and medium grain rice under section 1104, the base acres of rice on the farm shall be apportioned using the 4-year average of the percentages of acreage planted in the applicable State to long grain rice and medium grain rice during the 2003 through 2006 crop years, as determined by the Secretary.
    (b) Producer Election.—
       As an alternative to the calculation method described in subsection (a), the Secretary shall provide producers on a farm the opportunity to elect to apportion rice base acres on the farm using the 4-year average of—
          (1) the percentages of acreage planted on the farm to long grain rice and medium grain rice during the 2003 through 2006 crop years;
          (2) the percentages of any acreage on the farm that the producers were prevented from planting to long grain rice and medium grain rice during the 2003 through 2006 crop years because of drought, flood, other natural disaster, or other condition beyond the control of the producers, as determined by the Secretary; and
          (3) in the case of a crop year for which a producer on a farm elected not to plant to long grain and medium grain rice during the 2003 through 2006 crop years, the percentages of acreage planted in the applicable State to long grain rice and medium grain rice, as determined by the Secretary.
    (c) Limitation.—
       In carrying out this section, the Secretary shall use the same total base acres, payment acres, and payment yields established with respect to rice under sections 1101 and 1102 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7911, 7912), as in effect on September 30, 2007, subject to any adjustment under section 1101 of this Act.

### SEC. 1109. Period of effectiveness.

    This subtitle shall be effective beginning with the 2008 crop year of each covered commodity through the 2012 crop year.