2014 Farm Bill

Page 1

UNITED STATES DEPARTMENT OF AGRICULTURE

FARM SERVICE AGENCY FACT SHEET March 2015

Actively Engaged in Farming and Payment Limits

Note: On March 26, 2015, the U.S. Department of Agriculture published proposed changes to the definition of 

“actively engaged in farming.” Until those changes take effect, the following information in this fact sheet is 

applicable.

To learn more about the proposed changes to the definition, to or comment on those changes, please visit 

www.regulations.gov and provide Regulation Identifier Number (RIN 0560-AI31). Or, you may submit written 

comments by mail to: James Baxa, Production, Emergencies, and Compliance Division, FSA, U.S. Department 

of Agriculture (USDA), Stop 0501, 1400 Independence Ave. SW, Washington, DC, 20250-0501. Persons with 

disabilities who require alternative means for communication (Braille, large print, audio tape, etc.) should 

contact the USDA Target Center at (202) 720-2600 (voice and TDD).

The deadline to submit comments on the proposed changes to the definition is May 26, 2015.

OVERVIEW

Congress and the U.S. Department of 

Agriculture (USDA) have established 

requirements to ensure that farm program 

benefits only go to farmers who are eligible. 

The Agricultural Act of 2014 (the 2014 Farm 

Bill) extends the actively engaged in farming 

and payment limitation requirements for the 

2014 through 2018 program years.

To be eligible for payments and benefits, the 

2014 Farm Bill requires program participants 

to meet specific requirements as follows. 

ACTIVELY ENGAGED IN FARMING

All program participants, whether an 

individual or a legal entity (partnerships, 

corporations, etc.), must provide significant 

contributions to the farming operation to be 

considered “actively engaged in farming.” 

Contributions can consist of capital, land, and/

or equipment, as well as active personal labor 

and/or active personal management. 

The management contribution must be critical 

to the profitability of the farming operation and 

the contributions must be at risk.

ADDITIONAL PAYMENT ELIGIBILITY 

REQUIREMENTS

Each partner, stockholder or member with an 

ownership interest must contribute active personal labor and/or active personal 

management to the farming operation on a 

regular basis. The contribution must be 

identifiable and documentable, as well as 

separate and distinct from the contributions 

made by any other partner, stockholder or 

member. If any partner, stockholder or member 

with an ownership interest fails to meet this 

requirement, program payments will be 

reduced by the corresponding share held by 

that partner, stockholder or member. 

There is an exception allowed for legal 

entities, such as corporations, if total direct 

payments received both directly and indirectly, 

by the legal entity and its members do not 

exceed $125,000. 

EXCEPTIONS TO THE GENERAL 

REQUIREMENTS 

Landowners may be considered “actively 

engaged in farming” if they contribute the 

owned land to the farming operation and in 

return, receive rent or income for the use of the 
FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

land. The landowner’s share of the profits or 

losses from the farming operation must also be 

commensurate with the landowner’s 

contributions to the farming operation and the 

contributions must be at risk.

If one spouse has been determined “actively 

engaged in farming,” the other spouse will be 

considered to have made a significant 

contribution of active personal labor or active 

personal management toward meeting the 

requirements to be considered “actively 

engaged in farming.” 

Sharecroppers may be considered “actively 

engaged in farming” if the sharecropper makes 

a significant contribution of active personal 

labor to the farming operation and in return 

receives a specified share of the crop(s) 

produced on the farm. The sharecropper’s 

share of the profits or losses from the 

farming operation must be commensurate with 

the sharecropper’s contributions and the 

contributions must be at risk.

A cash-rent tenant will be ineligible to receive 

payments on the cash-rented land unless the 

tenant makes a significant contribution of 

active personal labor. If the cash-rent tenant 

does not provide labor, he or she must make a 

significant contribution of both active personal 

management and equipment to the farming 

operation. All other “actively engaged in 

farming” requirements apply as well. 

FOREIGN PERSONS

Foreign persons, other than registered aliens, 

are not eligible to receive any program benefits 

including commodity loans, unless that person 

provides a significant contribution of capital, 

land and active personal labor to the farming 

operation. 

NOTIFICATION REQUIREMENTS

Every legal entity earning payment subject 

to these rules must report to their local Farm 

Service Agency (FSA) committee the name 

and social security number of each person who 

owns, either directly or indirectly, any 

interest in such legal entity. The legal entity 

is also required to inform all members of the 

rules regarding payment eligibility and 

payment limitation.

DIRECT ATTRIBUTION

The 2014 Farm Bill establishes a maximum 

dollar amount for each program that can be 

received annually, directly or indirectly, by 

each person or legal entity. Such limitations on 

payments are controlled by direct attribution. 

Program payments made directly or indirectly 

to a person are combined with the pro rata 

interest held in any legal entity that received 

payment, unless the payments to the legal 

entity have been reduced by the pro rata share 

of the person. 

Program payments made directly to a legal 

entity are attributed to those persons that have 

a direct and indirect interest in the legal 

entity, unless the payments to the legal entity 

have been reduced by the pro rata share of the 

person. Payment attribution to a legal entity 

is tracked through four levels of ownership. If 

any part to the ownership interest at the fourth 

level is owned by another legal entity, a 

reduction in payment will be applied to the 

payment entity in the amount that represents 

the indirect interest of the fourth level entity in 

the payment entity. 

COMMON ATTRIBUTION

Common attribution means crediting payments 

made to a person or legal entity collectively 

to one limitation due to a unique or specific 

relationship between the persons or legal 

Page 2
entities. Common attribution applies to a 

minor child and a parent or legal guardian; and 

a parent organization over a secondary 

organization when the parent organization 

exercises control over the secondary 

organization. 

OWNERSHIP INTEREST FOR DIRECT 

ATTRIBUTION 

For the purposes of the direct attribution of 

payments, ownership interest that a person or 

legal entity holds in a legal entity on June 1 

of the current year is used. Direct attribution 

of payments is not applicable to cooperative 

associations of producers. The payments will 

instead be attributed to the members of the 

association that produced the commodities 

marketed by the association on behalf of the 

members. 

MINOR CHILD RULES

June 1 of the current year is the date a child is 

considered to be a minor for payment 

attribution purposes. Payments received both 

directly and indirectly by a minor child are 

attributed to the parent or legal guardian. 

PAYMENT LIMITS

Person - Payments made directly or 

indirectly to a person cannot exceed the annual 

amounts specified in the table on page 4.

Joint Operations and General 

Partnerships - Payments made directly or 

indirectly to a joint operation such as a general 

partnership, cannot exceed, for each payment 

specified in the table below, the amount 

determined by multiplying the maximum 

payment amount specified for a program by 

the number of persons and legal entities that 

comprise the ownership of the joint operation. 

Payments to the joint operation will be 

reduced by an amount that represents the direct 

or indirect ownership in the joint operation by 

any person or legal entity that has reached the 

maximum limitation. 

Legal Entities - Payments made directly or 

indirectly to a legal entity cannot exceed the 

annual amounts specified in the table on page 

4. Payments made to a legal entity will be 

reduced by an amount that represents the direct 

or indirect ownership in the legal entity by 

any person or legal entity that has reached the 

maximum limitation.

MORE INFORMATION

To find more information about FSA programs, 

contact your local FSA office or USDA 

Service Center, or visit FSA online at 

www.fsa.usda.gov/activelyengaged. To find 

your local FSA office, visit http://offices.usda.

gov.

The U.S. Department of Agriculture (USDA) prohibits discrimination against its customers, employees, and applicants for employment on the bases of race, color, national origin, age, disability, 

sex, gender identity, religion, reprisal, and where applicable, 

political beliefs, marital status, familial or parental status, sexual 

orientation, or all or part of an individual’s income is derived from 

any public assistance program, or protected genetic information 

in employment or in any program or activity conducted or funded 

by the Department. (Not all prohibited bases will apply to all 

programs and/or employment activities.) Persons with disabilities, 

who wish to file a program complaint, write to the address below 

or if you require alternative means of communication for program 

information (e.g., Braille, large print, audiotape, etc.) please 

contact USDA’s TARGET Center at (202) 720-2600 (voice and 

TDD). Individuals who are deaf, hard of hearing, or have speech 

disabilities and wish to file either an EEO or program complaint, 

please contact USDA through the Federal Relay Service at (800) 

877-8339 or (800) 845-6136 (in Spanish). 

If you wish to file a Civil Rights program complaint of discrimination, complete the USDA Program Discrimination Complaint 

Form, found online at http://www.ascr.usda.gov/complaint_filing_cust.html, or at any USDA office, or call (866) 632-9992 to 

request the form. You may also write a letter containing all of the 

information requested in the form. Send your completed complaint form or letter by mail to U.S. Department of Agriculture, 

Director, Office of Adjudication, 1400 Independence Avenue, S.W., 

Washington, D.C. 20250-9410, by fax (202) 690-7442 or email at 

program.intake@usda.gov. 

USDA is an equal opportunity provider and employer.

FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

Page 3
FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

Page 4

This table contains the annual payment limitations for a person or legal entity for 

programs that are subject to the provisions of the 2014 Act.

Program Payment Type

Limitation Amount

2014 Through 2018

Commodity Programs

Price Loss Coverage, Agricultural Risk Coverage, Loan 

Deficiency Program, and Marketing Loan Gain payments

(other than Peanuts)

$125,000

Price Loss Coverage, Agricultural Risk Coverage, Loan 

Deficiency Program, and Marketing Loan Gain payments 

for Peanuts

$125,000

Transition Assistance for Producer of Upland Cotton $40,000 1/

Conservation Programs

CRP annual rental payment and incentive payment. $50,000 2/

ECP (per disaster event) $200,000

EFRP (per disaster event) $500,000

CSP $200,000 3/

EQIP $450,000 4/

AMA $50,000 5/

Disaster Assistance Programs

ELAP, LFP, LIP $125,000 6/

NAP $125,000

TAP $125,000

Price Support Programs

LDP, MAL, and MLG $125,000 1/

Other Programs

TAAF $10,000

1/ Transition Assistance for Producers of Upland Cotton is only available in the 2014 and 

2015 program years.

2/ CRP contracts approved prior to October 1, 2008 may exceed the limitation, subject to 

payment limitation rules in effect on the date of contract approval.

3/ The $200,000 limitation is the total limit under all CSP contracts entered into subsequent 

to the enactment of the 2014 Farm Bill during fiscal years 2014 through 2018.

4/ The $450,000 limitation is the total limit under all EQIP contracts entered into subsequent 

to the enactment of the 2014 Farm Bill during fiscal years 2014-2018.

5/ The $50,000 limitation is the total limit that a participant may receive under the AMA 

program in any fiscal year.

6/ Total payments received under LIP, LFP, and ELAP may not exceed $125,000. A 

separate limitation applies to TAP payments. (Note: For SURE payments for losses on 

or before September 30, 2011, the payment limit regulations in effect when those losses 

occurred apply. The SURE limit is separate from the payment limitation amount 

applicable to LIP, LFP, TAP, and ELAP benefits authorized under the 2014 Farm Bill).
The Proposed Definition Change for “Actively Engaged in Farming”

Frequently Asked Questions

1. Q: What is the current definition of “actively engaged” in farming?

A: One must be “actively engaged” in farming to be eligible to receive certain farm 

program payments. That means a person must make significant contributions to the 

farming operation of: (1) land, capital, or equipment, and (2) personal labor, active 

personal management, or a combination of personal labor and active personal 

management. General partnerships and joint ventures sometimes supply all of the 

group (1) capital inputs. When that occurs, their members can become actively 

engaged by contributing management.

2. Q: How long has the existing definition existed?

A: The existing definition was enacted by Congress in 1987 and took effect in the 1989 

crop year. The planned revision will be the first substantial change made to this 

definition since it was established by Congress in 1987.

3. Q: What is the purpose of this definition?

A: The definition was designed to ensure that only farming operations whose members 

were actively engaged in farming, including management of the farm, would be 

eligible for farm program payments. 

4. Q: Has the existing definition of “actively engaged in farming” achieved its

purpose?

A: Concerns remain about the potential for individuals of general partnerships and joint 

ventures, who have minor contributions to management, to receive farm program 

payments.

5. Q: Why is the U.S. Department of Agriculture proposing this rule?

A: The changes are consistent with the requirements Congress mandated by the 2014 

Farm Bill. The proposed rule will apply exclusively to non-family farm general 

partnerships and joint ventures, and will limit them to a maximum of three members 

who can qualify for payments solely by their contribution of management.

FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

Page 5
FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

6. Q: What would this proposed change achieve compared to the existing definition?

A: The proposed changes would prohibit farm program payments to individuals who 

cannot verify that they make a significant contribution of active management to a 

farming entity.

7. Q: How does the rule propose to define “active personal management”?

A: “Active personal management” is proposed to mean personally providing and 

participating in management activities critical to the profitability of the farming 

operation and performed under one or more of the following categories:

(1) Capital (which includes: arranging financing and managing capital; acquiring 

equipment; acquiring land and negotiating leases; managing insurance; and managing 

participation in USDA programs);

(2) Labor (which includes hiring and managing of hired labor); and

(3) Agronomics and marketing (which includes: selecting crops and making planting 

decisions; acquiring and purchasing crop inputs; managing crops and making harvest 

decisions; and pricing and marketing of crop production.)

8. Q: How does this rule propose to define “significant contribution of active personal 

management”?

A: “Significant contribution of active personal management” is proposed to mean active 

personal management activities performed by a person, with a direct or indirect 

ownership interest in the farming operation, on a regular, continuous, and substantial 

basis to the farming operation, and meets at least one of the following:

(1) Performs at least 25 percent of the total management hours required for the farming 

operation on an annual basis; or

(2) Performs at least 500 hours of management annually for the farming operation.

9. Q: What programs will these changes to “actively engaged” affect? 

A: By law, the proposed rule applies to payment eligibility for the Agriculture Risk 

Coverage (ARC) and Price Loss Coverage (PLC) Programs, loan deficiency 

payments (LDPs) and marketing loan gains realized via the Marketing Assistance 

Loan (MAL) program.

The rule would not change the existing regulations as they relate to contributions of 

land, capital, equipment, or labor, or the existing regulations related to landowners 

with a risk in the crop, or to spouses. Farming operations operated by entities other 

than general partnerships or joint ventures would not be affected. Only those general

Page 6
partnerships and joint ventures which seek to qualify for payment eligibility in which 

more than one member contributes management to the farming operation would be 

affected.

10. Q: Are general partnerships and joint ventures that are totally owned by family 

members exempt from this proposed rule?

A: Yes. If a farming operation is operated by only one of these entity types and all 

members are family members, then the farming operation and corresponding entity is 

exempt from this proposed rule. The proposed rule would not change the definition of 

“family member.” A family member is “a person to whom another member in the 

farming operation is related as a lineal ancestor, lineal descendant, sibling, spouse, or 

otherwise by marriage.” Farm Service Agency (FSA) handbooks further clarify that 

family members include great grandparent, grandparent, parent, child, including 

legally adopted children and stepchildren, grandchild, great grandchild, or a spouse or 

sibling of family members.

11. Q: If the farming operation is composed of two or more general partnerships or 

joint ventures, must all these farming entities be composed solely of members of 

the same family to be exempt from the proposed rule’s limitations on managers?

A: Yes. Determination regarding familial relationships would be made for the farming 

operation, not independently for the entities that compose the farming operation.

12. Q: Is this new definition effective immediately? If not, when will the new definition 

take affect?

A: No, these proposed definition and regulatory changes and will not be effective 

immediately. USDA seeks comments from the public on these proposals and only 

after those comments have been received and reviewed will any final determination 

be made. Stakeholders interested in commenting on the proposed definition and 

changes are encouraged to provide written comments by the deadline of May 26, 

2015. USDA plans to implement a final rule that would be applicable to the 2016 and 

subsequent years.

13. Q: How many people will be affected by these changes? 

A: Most people in farming would not be affected by the proposed changes. They would 

apply only to farming operations that are operated by non-family general partnerships 

or joint ventures and participate in the applicable USDA programs. USDA data 

indicates that there are approximately 1,500 such entities that may be affected 

(compared with more than 1 million persons and entities that received Commodity 

Credit Corporation payments in 2013.) Affected farming operations would be allowed 

to designate one manager that becomes actively engaged solely by making a 

significant contribution of active personal management Depending on the farming 

operation’s size and complexity, up to two additional managers could be deemed to 

be eligible for payments. The number of people (managers) eligible to receive 

payments for these affected farming operations cannot exceed three.

FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

Page 7
FACT SHEET

Actively Engaged in Farming and Payment Limits March 2015

14. Q: What are the requirements that must be met to allow these additional managers 

to a farming operation?

A: There are two sets of requirements for the addition of managers. At least one of the 

sets of requirements must be met for the addition of one manager; both sets must be 

met for the addition of two managers. One set addresses the size of the farming 

operation in terms of cropland acres or number of livestock in the operation if crop 

production is not part of the operation. The other set addresses the complexity of the 

farming operation in terms of the number and various types of crops grown or 

livestock produced, the marketing channels utilized for sale of the production, and the 

geographical area covered by the farming operation. All requests are subject to FSA 

and FSA State Committee approval.

15. Q: I’m not sure if this definition affects me - - how or where can I learn more?

A: You may read the proposed changes online at: 

http://www.fsa.usda.gov/FSA/federalNotices?area=home&subject=lare&topic=frd-pi

For further information, contact James Baxa at (202) 720-7641. Persons with 

disabilities who require alternative means for communication (Braille, large print, 

audio tape, etc.) should contact the USDA Target Center at (202) 720-2600 (voice 

and TDD).

16. Q: I want to comment on these proposed changes. How may I do so?

A: Stakeholders interested in commenting on the proposed definition and changes are 

encouraged to provide written comments by the deadline of May 26, 2015. In your 

comments, please include the Regulation Identifier Number (specifically, RIN 0560-

AI31) and the volume, date, and page number of the specific issue of the Federal 

Register. You may submit comments by any of the following methods:

 Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online 

instructions for submitting comments.

 Mail, hand delivery, or courier: James Baxa, Production, Emergencies, and 

Compliance Division, FSA, U.S. Department of Agriculture (USDA), Stop 0501, 

1400 Independence Ave. SW, Washington, DC, 20250-0501.

Comments will be available online at www.regulations.gov. Comments may also be 

inspected at the mail address listed above between 8:00 a.m. and 4:30 p.m., Monday 

through Friday, except holidays. A copy of this proposed rule is available at 

http://go.usda.gov/3C6Kk.

Page 8