15916 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Commodity Credit Corporation 

7 CFR Part 1400 

RIN 0560–AI31 

Payment Limitation and Payment 

Eligibility; Actively Engaged in 

Farming 

AGENCY: Commodity Credit Corporation, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: The Farm Service Agency 

(FSA) is proposing to revise regulations 

on behalf of the Commodity Credit 

Corporation (CCC) to specify the 

requirements for a person to be 

considered actively engaged in farming 

for the purpose of payment eligibility 

for certain FSA and CCC programs. 

Specifically, this rulemaking proposes 

to revise and clarify the requirements 

for a significant contribution of active 

personal management to a farming 

operation. These changes are required 

by the Agricultural Act of 2014 (the 

2014 Farm Bill). The provisions of this 

rule would not apply to persons or 

entities comprised solely of family 

members. 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. 

DATES: Comment Date: Comments must 

be received by May 26, 2015. 

ADDRESSES: We invite you to submit 

comments on this rule. In your 

comment, please include the Regulation 

Identifier Number (RIN) and the 

volume, date, and page number of this 

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 through the FSA homepage 

at http://www.fsa.usda.gov/. 

FOR FURTHER INFORMATION CONTACT: 

James Baxa; Telephone: (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). 

SUPPLEMENTARY INFORMATION: 

Overview 

Several CCC programs managed by 

FSA, specifically the Market Loan Gains 

(MLG) and Loan Deficiency Payments 

(LDP) associated with the Marketing 

Assistance Loan (MAL), Program the 

Agriculture Risk Coverage (ARC) 

Program, and the Price Loss Coverage 

(PLC) Program, require that a person be 

‘‘actively engaged in farming’’ as a 

condition of eligibility for payments. As 

specified in 7 CFR part 1400, a person 

must contribute: (1) Land, capital, or 

equipment; and (2) personal labor, 

active personal management, or a 

combination of personal labor and 

active personal management to be 

considered ‘‘actively engaged in 

farming’’ for the purposes of payment 

eligibility. Section 1604 of the 2014 

Farm Bill (Pub. L. 113–79) requires the 

Secretary of Agriculture to define in 

regulations what constitutes a 

‘‘significant contribution of active 

personal management’’ for the purpose 

of payment eligibility. Therefore, this 

rule proposes to amend 7 CFR part 1400 

to define that term and to revise the 

requirements for active personal 

management contributions. The 2014 

Farm Bill also requires the Secretary to 

consider establishing limits on the 

number of persons per farming 

operation who may be considered 

actively engaged in farming based on a 

significant contribution of active 

personal management. This rule 

proposes to amend 7 CFR part 1400 to 

set a limit of one person per farming 

operation who may qualify based on a 

contribution of active personal 

management and not on a contribution 

of personal labor, with exceptions for up 

to three persons for large and complex 

farming operations if additional 

requirements are met. The new 

requirements and definitions would be 

specified in a new subpart G to 7 CFR 

part 1400. 

Exceptions for Entities Comprised 

Solely of Family Members 

As required by the 2014 Farm Bill, the 

provisions of this proposed rule would 

not apply to farming operations 

comprised of persons or entities 

comprised solely of family members. 

The definition of ‘‘family member’’ is 

not changing with this rule. As specified 

in 7 CFR 1400.3, 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.’’ FSA 

handbooks further clarify that eligible 

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. 

In 7 CFR 1400.208, there are existing 

provisions for family members to be 

considered actively engaged in farming 

by making a significant contribution of 

active personal labor, or active personal 

management, or a combination thereof, 

to a farming operation comprised of a 

majority of family members, without 

making a contribution of land, 

equipment, or capital. The new subpart 

G would not change these provisions. 

Existing Provisions and Exceptions for 

Actively Engaged Requirements That 

Would Not Change 

As specified in the current 

regulations, there are exceptions to the 

requirement that a person be actively 

engaged in farming by contributing 

labor or management to be eligible for 

payments. These exceptions for certain 

landowners and for spouses would not 

be changed with this rule. Specifically, 

landowners who share a risk in the crop 

(profit or loss based on value of crop 

and not fixed rent amount) are 

considered to be actively engaged just 

by contributing land and being at risk; 

they do not have to contribute 

management or labor. If one spouse is 

considered to be actively engaged by 

contributing management or labor, the 

other spouse may be considered to be 

actively engaged without making a 

separate, additional contribution of 

management or labor. 

The proposed rule would clarify how 

persons and legal entities comprised of 

nonfamily members may be eligible for 

payments, based on a contribution of 

active personal management made by 

persons with a direct or indirect interest 

in the farming operation. Payments 

made to persons or legal entities are 

attributed to persons as specified in 7 

CFR 1400.105, and the methods for 

attribution would not change with this 

rule. 

Additional Requirements for Certain 

Nonfamily General Partnerships and 

Joint Ventures 

The proposed definition and standard 

for evaluating what constitutes a 

significant contribution of active 

personal management would apply to 

all nonfamily farming operations 

seeking to have more than one person 

qualify as actively engaged in farming 

by providing a significant contribution 

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Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15917 

of active personal management and not 

personal labor (‘‘farm manager’’). 

Therefore, the proposed rule would only 

apply to farming operations structured 

as a general partnership or joint venture 

comprised of persons, corporations, 

limited liability companies (LLCs), 

estates, trusts, or other similar entities 

seeking more than one farm manager. 

Similarly, the existing requirement that 

farming operations supply information 

to FSA county committees (COC) on 

each member’s contribution or expected 

contribution related to actively engaged 

determinations would be unchanged 

and would continue to apply to all 

entities. However, farming operations 

that would be subject to this proposed 

rule would be required to provide a 

management log. 

For most farming operations that are 

entities, such as corporations and LLCs, 

adding an additional member to the 

entity does nothing to change the 

number of payment limits available and 

it simply increases the number of 

members that share a single $125,000 

payment limit. But for general 

partnerships and joint ventures, adding 

another member to the operation can 

provide an additional $125,000 payment 

limit if the new member meets the other 

eligibility requirements, including being 

actively engaged in farming. This 

potential for a farming operation being 

able to qualify for multiple payment 

limits provides an opportunity to add 

members and to have those members 

claim actively engaged status, especially 

for farming operations close to or in 

excess of the payment limit. 

For this reason, several additional 

requirements are being proposed for 

nonfamily farming operations seeking to 

qualify more than one farm manager. 

Specifically, in addition to providing 

information to FSA regarding the 

elements related to an actively engaged 

determination, there would be a 

restriction on the number of members of 

a farming operation that can be qualified 

as a farm manager and there would be 

an additional recordkeeping 

requirement for such farming 

operations. 

Number of Farm Managers That May 

Qualify as Actively Engaged 

This rule would restrict the number of 

farm managers to one person, with 

exceptions. Nonfamily member farming 

operations only seeking one farm 

manager would not be subject to the 

proposed rule. Such operations would 

continue to be subject to the existing 

regulations in subparts A and C of 7 

CFR part 1400 governing actively 

engaged in farming. 

Any farming operation seeking two or 

three farm managers would be required 

to meet the requirements of subpart G 

for all farm managers in the farming 

operation including the maintenance of 

the records or logs discussed below for 

all the managers in the farming 

operation. The farming operation may 

qualify for up to one additional farm 

manager as a large operation, and up to 

one additional farm manager as a 

complex operation. To qualify for three 

farm managers, the operation would 

have to meet the standards specified in 

this rule for both size and complexity. 

In other words, a very large farm 

operation that is not complex (for 

example, one growing a single crop) 

could only qualify for two managers, not 

three. Under no circumstances would a 

farming operation be allowed to qualify 

more than three farm managers. 

The default standard for what 

constitutes a large farming operation 

would be an operation with crops on 

more than 2,500 acres (planted or 

prevented planted) or honey or wool 

with more than 10,000 hives or 3,500 

ewes, respectively. The acreage standard 

is based on an analysis of responses to 

the Agricultural Resource Management 

Survey that indicate that on average 

farms producing eligible commodities 

that required more than one full time 

manager equivalent (2,040 hours of 

management) had 2,527 acres. The size 

standards for honey and wool did not 

have comparable survey information 

available. The honey standard of 

number of hives is based on the 

beekeepers participating in 2011 

through 2012 Emergency Assistance for 

Livestock, Honey Bees, and Farm-Raised 

Fish that met or exceeded the payment 

limit. These large operations averaged 

10,323 hives. The sheep standard was 

based on industry analysis that showed 

that operations with 1,500 through 

2,000 ewes could be full time. The 3,500 

standard is approximately double that 

threshold. Given the limited 

information available especially for the 

honey and wool size standards, we are 

specifically seeking comment on this 

issue in this proposed rule. State FSA 

committees (STCs) would have 

authority to modify these standards for 

their state based on the STC’s 

determination of the relative size of 

farming operations in the state by up to 

15 percent (that is plus or minus 375 

acres, 1,500 hives or 525 ewes). In other 

words, the standard in a particular state 

may range from 2,125 acres to 2,875 

acres; 8,500 to 11,500 hives; or 2,975 to 

4,025 ewes. Relief from the State level 

standard would only be granted on a 

case by case basis by DAFP. 

If a farming operation seeks a farm 

manager based on the complexity of the 

operation under the proposed rule, the 

farming operation would make a request 

that addresses the factors established in 

the proposed rule which would take 

into account the diversity of the 

operation including the number of 

agricultural commodities produced; the 

types of agricultural crops produced 

such as field, vegetable, or orchard 

crops; the geographical area in which an 

operation farms and produces 

agricultural commodities; alternative 

marketing channels (that is, fresh, 

wholesale, farmers market, or organic); 

and other aspects about the farming 

operation such as the production of 

livestock, types of livestock, and the 

various livestock products produced 

and marketed annually. All farming 

operations seeking to qualify one 

additional manager based on complexity 

which are approved by the STC would 

also have eligibility reviewed by the 

Deputy Administrator for Farm 

Programs (DAFP), to ensure consistency 

and fairness on a national level. 

Records on the Performance of 

Management Activities 

Under the proposed rule, if a farming 

operation is seeking to qualify more 

than one farm manager, then all persons 

that provide management of the 

operation would be required to maintain 

contemporaneous records or activity 

logs of their management activities, 

including management activities that 

would not qualify as active personal 

management under the proposed rule. 

Specifically, activity logs would include 

information about the hours of 

management provided. While the 

recordkeeping requirements under the 

proposed rule would be similar to the 

current provisions at 7 CFR 1400.203 

and 1400.204 in which contributions 

must be identifiable and documentable, 

and separate and distinct from the 

contributions of other members, these 

additional records or logs would also 

include the location of where the 

management activity was performed and 

the time expended or duration of the 

management activity performed. These 

records and logs would be required to 

be available if requested by the 

appropriate FSA reviewing authority. If 

a person failed to meet this requirement, 

the represented contribution of active 

personal management would be 

disregarded and the person’s eligibility 

for payments would be re-determined. 

Section 1604 of the Farm Bill requires 

USDA to ensure that any additional 

paperwork that would be required by 

the proposed rule be limited only to 

persons in farming operations who 

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15918 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 

would be subject to the proposed rule. 

As described above, the additional 

recording and recordkeeping 

requirements of this rule would only 

apply to persons in farming operations 

seeking to qualify more than one farm 

manager. 

New Definition of Significant 

Contribution of Active Personal 

Management 

The existing definition of a 

‘‘significant contribution’’ in 7 CFR 

1400.3 specifies that for active personal 

management, a significant contribution 

includes ‘‘activities that are critical to 

the profitability of the farming 

operation,’’ but that definition does not 

specify what specific types of activities 

are included, whether these activities 

need to be direct actions and not passive 

activities, and to what level or degree 

such activities must be performed to 

achieve a level of significance. 

This proposed rule would apply a 

new definition of ‘‘significant 

contribution of active personal 

management’’ only to non-family 

farming operations that are seeking to 

qualify more than one farm manager. 

Similar to the existing requirements in 

7 CFR 1400.3 for a substantial amount 

of personal labor, the new definition for 

a significant contribution of active 

personal management would require an 

annual contribution of 500 hours of 

management, or at least 25 percent of 

the total management required for that 

operation. The proposed rule would 

also add a new, more specific definition 

for ‘‘active personal management’’ that 

includes a list of critical management 

activities that may be used to qualify as 

a significant contribution. 

The 2014 Farm Bill requires us to 

specify a definition in regulations; the 

specific definition proposed reflects a 

discretionary analysis of various 

alternatives. Various proposals and 

concepts were considered in the 

development of this proposed rule, 

including a minimum level of interest a 

person must hold in a farming operation 

before the person could qualify as 

actively engaged with only an active 

personal management contribution, a 

weighted ranking of critical activities 

performed, or a higher hourly threshold. 

The hourly requirement standard 

proposed here is intended to address the 

2014 Farm Bill requirement for clear 

and objective standards. 

The new definition would change 

what constitutes ‘‘active personal 

management’’ only for farm managers in 

nonfamily farming operations seeking to 

qualify two or three farm managers. The 

proposed requirements for such farm 

managers would clarify that eligible 

management activities are critical 

actions performed under one or more of 

the following categories: 

• Capital, land, and safety-net 

programs: Arrange financing, manage 

capital, acquire equipment, negotiate 

land acquisition and leases, and manage 

insurance or USDA program 

participation; 

• Labor: Hire and manage labor; and 

• Agronomics and Marketing: Decide 

which crop(s) to plant, purchase inputs, 

manage crops (that is, whatever it takes 

to keep the growing crops living and 

healthy—soil fertility and fertilization, 

weed control, insect control, irrigation if 

applicable), price crops, and market 

crops or futures. 

The management activities described 

would emphasize actions taken by the 

person directly for the benefit and 

success of the farming operation. Under 

the proposed rule, passive management 

activities such as attendance of board 

meetings or conference calls, or 

watching commodity markets or input 

markets (without making trades) would 

not be considered as contributing to 

significant management. The proposed 

rule only would consider critical actions 

as specified in the new definition of 

‘‘active personal management’’ as 

contributing to significant management. 

The new definition and requirements 

in the proposed rule would take into 

account the size and complexity of 

farming operations across all parts of the 

country. The proposed rule takes into 

consideration all of the actions of the 

farming operation associated with the 

financing; crop selection and planting 

decisions; land acquisitions and 

retention of the land assets for an 

extended period of time; risk 

management and crop insurance 

decisions; purchases of inputs and 

services; utilization of the most efficient 

field practices; and prudent marketing 

decisions. Furthermore, in developing 

the proposed rule, FSA took into 

account advancements in farming, 

communication, and marketing 

technologies that producers must avail 

themselves of to remain competitive and 

economically viable operations in 

today’s farming world. 

Under the proposed rule, eligible 

management activities would include 

the activities required for the farming 

operation as a whole, not just activities 

for the programs to which the ‘‘actively 

engaged in farming’’ requirement 

applies. For example, if a farming 

operation is participating in ARC or PLC 

and using grain eligible for those 

programs to feed dairy cattle, activities 

to manage the dairy side of the 

operation would be considered as 

eligible management activities to qualify 

as a farm manager. Similarly, if a 

farming operation receives MLG or LDPs 

on some crops, but not on others, all the 

management activities for all the crops 

would be considered for eligibility 

purposes. 

The proposed rule would clarify that 

the significant contribution of a person’s 

active management may be used only to 

enable one person or entity in a farming 

operation to meet the requirements of 

being actively engaged in farming. For 

example, if members of a joint operation 

are entities, one person’s contribution 

could only qualify one of the entities 

(and not any other entity to which the 

person belongs), as actively engaged in 

farming. 

Comments Requested 

While this rule identifies an option 

that would allow a maximum of three 

managers to qualify the farming 

operation for farm payments for large or 

complex farming operations, we remain 

open to analysis and views of other 

options of merit that have been 

considered throughout the development 

of both this rule and the 2014 Farm Bill. 

We encourage comments to address 

whether the proposed change for the 

number of managers is appropriate and 

whether our definitions of large and 

complex farming operations are 

reasonable (as discussed above). 

Although the 2014 Farm Bill explicitly 

excludes the provisions of this proposed 

rule from applying to farming 

operations comprised solely of family 

members, we request comments on 

whether farming entities owned by 

family members should be subject to the 

same limits as other farming operations. 

We also encourage comments to 

address whether there should be a strict 

limit of one manager, or if another 

option should be implemented to 

reduce the risk that individuals who 

have little involvement in a farming 

operation use the active personal 

management provision to qualify the 

farming operation for farm program 

payments. The proposed changes would 

not mandate how farms are structured; 

that is up to the farming operation. 

FSA is requesting comments from the 

public on the methods that should be 

used to determine whether a person is 

actively engaged in farming for the 

purpose of payment eligibility and the 

number of managers per farming 

operation that may be eligible. 

Specifically, comments on the following 

topics may be helpful: 

1. Should other methods be used to 

determine which activities constitute a 

significant contribution of active 

personal management? Should other 

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Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15919 

activities be considered as active 

personal management? 

2. Should different standards be 

applied for the amount of management 

required for eligibility, such as a 

different number of hours, a percentage 

financial interest in the entity, or other 

criteria? 

3. Should there be a different limit to 

the number of farm managers in a 

farming operation that qualify as 

actively engaged? If yes, how should 

that limit be determined? 

4. Are there certain management 

activities or practices that are unique to 

particular farming methods, crops, or 

regions that should be taken into 

consideration? 

The following suggestions may be 

helpful for preparing your comments: 

• Explain your views as clearly as 

possible. 

• Describe any assumptions that you 

used. 

• Provide any technical information 

and data on which you based your 

views. 

• Provide specific examples to 

illustrate your points. 

• Offer specific alternatives to the 

current regulations or policies and 

indicate the source of necessary data, 

the estimated cost of obtaining the data, 

and how the data can be verified. 

• Submit your comments to be 

received by FSA by the comment period 

deadline. 

Executive Orders 12866 and 13563 

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 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

The Office of Management and Budget 

(OMB) designated this proposed rule as 

significant under Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ and therefore, OMB has 

reviewed this rule. The costs and 

benefits of this proposed rule are 

summarized below. The full cost benefit 

analysis is available on regulations.gov. 

Clarity of the Regulation 

Executive Order 12866, as 

supplemented by Executive Order 

13563, requires each agency to write all 

rules in plain language. In addition to 

your substantive comments on this 

proposed rule, we invite your comments 

on how to make the rule easier to 

understand. For example: 

• Are the requirements in the rule 

clearly stated? Are the scope and intent 

of the rule clear? 

• Does the rule contain technical 

language or jargon that is not clear? 

• Is the material logically organized? 

• Would changing the grouping or 

order of sections or adding headings 

make the rule easier to understand? 

• Could we improve clarity by adding 

tables, lists, or diagrams? 

• Would more, but shorter, sections 

be better? Are there specific sections 

that are too long or confusing? 

• What else could we do to make the 

rule easier to understand? 

Summary of Economic Impacts 

About 1,400 joint operations could 

lose eligibility for around $50 million in 

total crop year 2016 to 2018 benefits 

from the Price Loss Coverage (PLC), 

Agriculture Risk Coverage (ARC), and 

Marketing Assistance Loan (MAL) 

programs (ranging from $38 million for 

the 2016 crop year down to 

approximately $4 million for the 2018 

crop year). This is the expected cost to 

producers of this rule. This rule does 

not change the payment limit per 

person, which is a joint $125,000 for the 

applicable programs. As specified in the 

current regulations, the payment limits 

apply to general partnerships and joint 

operations based on the number of 

eligible partners in the operation; each 

partner may qualify for a separate 

payment limit of $125,000. In other 

words, each person in the partnership or 

joint operation who loses eligibility will 

lose eligibility for up to $125,000 in 

payments. 

Other types of entities (such as 

corporations and limited liability 

companies) that share a single payment 

limit of $125,000, regardless of their 

number of owners, would not have their 

payments reduced by this rule. Each 

owner must contribute management or 

labor to the operation to qualify the 

operation to receive the member’s share 

of the single payment limit. 

No entities comprised solely of family 

members will be impacted by this rule. 

If commodity prices are sufficiently 

high that few producers are eligible for 

any benefits, the costs of this rule to 

producers (and savings to USDA) will 

be less, even zero. In other words, if 

very few producers are earning farm 

program payments due to high 

commodity prices, limiting eligibility on 

the basis of management contributions 

will not have much impact. Government 

costs for implementing this rule are 

expected to be minimal. 

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), 

generally requires an agency to prepare 

a regulatory analysis of any rule 

whenever an agency is required by APA 

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 proposed 

rule would not have a significant impact 

on a substantial number of small 

entities. The farming operations of small 

entities generally do not have to have 

multiple members that contribute only 

active personal management to meet the 

requirements of actively engaged in 

farming. 

Environmental Review 

The environmental impacts of this 

proposed 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). The Agricultural Act of 2014 (the 

2014 Farm Bill) requires that USDA 

publish a regulation to specifically 

define a ‘‘significant contribution of 

active personal management’’ for the 

purposes of determining payment 

eligibility. This proposed regulation 

would clarify the activities that qualify 

as active personal management and the 

recordkeeping requirements to 

document eligible management 

activities. This is a mandatory 

administrative clarification. As such, 

FSA has determined that this proposed 

rule does not constitute a major Federal 

action that would significantly affect the 

quality of the human environment, 

individually or cumulatively. 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 

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15920 Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 

review of proposed Federal financial 

assistance and direct Federal 

development. For reasons specified in 

the final rule related notice regarding 7 

CFR part 3015, subpart V (48 FR 29115, 

June 24, 1983), the programs and 

activities in this rule are excluded from 

the scope of Executive Order 12372. 

Executive Order 12988 

This proposed rule has been reviewed 

under Executive Order 12988, ‘‘Civil 

Justice Reform.’’ This proposed rule 

would not preempt State or local laws, 

regulations, or policies unless they 

represent an irreconcilable conflict with 

this rule. This proposed rule would 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 are to be 

exhausted. 

Executive Order 13132 

This proposed rule has been reviewed 

under Executive Order 13132, 

‘‘Federalism.’’ The policies contained in 

this proposed rule would 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 would this rule impose 

substantial direct compliance costs on 

State and local governments. Therefore 

consultation with the States is not 

required. 

Executive Order 13175 

This proposed 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 governmentto-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. 

FSA has assessed the impact of this 

proposed rule on Indian tribes and 

determined that this rule would not, to 

our knowledge, have tribal implications 

that require tribal consultation under 

Executive Order 13175. If a Tribe 

requests consultation, FSA will work 

with the USDA Office of Tribal 

Relations to ensure meaningful 

consultation is provided where changes, 

additions, and modifications identified 

in this rule are not expressly mandated 

by the 2014 Farm Bill. 

Unfunded Mandates 

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 on 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 

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 proposed rule contains no Federal 

mandates, as defined in Title II of 

UMRA, for State, local and Tribal 

governments or the private sector. 

Therefore, this proposed rule is not 

subject to the requirements of sections 

202 and 205 of UMRA. 

Federal Assistance Programs 

The title and number of the Federal 

Domestic Assistance Programs in the 

Catalog of Federal Domestic Assistance 

to which this rules applies are: 10.051 

Commodity Loans and Loan Deficiency 

Payments; 10.112 Price Loss Coverage; 

and 10.113 Agriculture Risk Coverage. 

Paperwork Reduction Act 

The regulations in this proposed rule 

are exempt from requirements of the 

Paperwork Reduction Act (44 U.S.C. 

Chapter 35), as specified in Section 

1601(c)(2)(B) of the 2014 Farm Bill, 

which provides that these regulations be 

promulgated and administered without 

regard to the Paperwork Reduction Act. 

Section 1604 of the Farm Bill requires 

us to ensure that any additional 

paperwork required by this rule be 

limited only to persons who are subject 

to this rule. The additional recording 

and recordkeeping requirements of this 

proposed rule would only apply to 

persons who are claiming eligibility for 

payments based on a significant 

contribution of active personal 

management to the farming operation. 

E-Government Act Compliance 

FSA is committed to complying with 

the E-Government Act, to promote the 

use of the Internet and other 

information technologies to provide 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

List of Subjects in 7 CFR Part 1400 

Agriculture, Loan programsagriculture, Conservation, Price support 

programs. 

For the reasons discussed above, CCC 

proposes to amend 7 CFR part 1400 as 

follows: 

PART 1400—PAYMENT LIMITATION 

AND PAYMENT ELIGIBILITY 

■ 1. The authority citation for part 1400 

continues to read as follows: 

Authority: 7 U.S.C. 1308, 1308–1, 1308–2, 

1308–3, 1308–3a, 1308–4, and 1308–5. 

§ 1400.1 [Amended] 

■ 2. In § 1400.1(a)(8), remove the words 

‘‘C and D’’ and add the words ‘‘C, D, and 

G’’ in their place. 

■ 3. Add subpart G to read as follows: 

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. 

1400.600 Applicability. 

1400.601 Definitions. 

1400.602 Restrictions on Active Personal 

Management Contributions. 

1400.603 Recordkeeping Requirements. 

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 

§ 1400.600 Applicability. 

(a) This subpart is applicable to all of 

the programs as specified in § 1400.1 

and any other programs as specified in 

individual program regulations. 

(b) The requirements of this subpart 

will apply to farming operations for FSA 

program payment eligibility and 

limitation purposes as specified in 

subparts B and C of this part. 

(c) The requirements of this subpart 

do not apply to farming operations 

specified in paragraph (b) of this section 

if either: 

(1) All persons who are partners, 

stockholders, or persons with an 

ownership interest in the farming 

operation or of any entity that is a 

member of the farming operation are 

family members as defined in § 1400.3; 

or 

(2) The farming operation is seeking 

to qualify only one person as making a 

significant contribution of active 

personal management for the purposes 

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Federal Register / Vol. 80, No. 58 / Thursday, March 26, 2015 / Proposed Rules 15921 

of qualifying only one person or entity 

as actively engaged in farming. 

§ 1400.601 Definitions. 

(a) The terms defined in § 1400.3 are 

applicable to this subpart and all 

documents issued in accordance with 

this part, except as otherwise provided 

in this section. 

(b) The following definitions are also 

applicable to this subpart: 

Active personal management means 

personally providing and participating 

in management activities considered 

critical to the profitability of the farming 

operation and performed under one or 

more of the following categories: 

(1) Capital, which includes: 

(i) Arranging financing and managing 

capital; 

(ii) Acquiring equipment; 

(iii) Acquiring land and 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 

it takes to keep 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. 

Significant contribution of active 

personal management means active 

personal management activities 

performed by a person, with a direct or 

indirect ownership interest in the 

farming operation, on a regular, 

continuous, and substantial basis to the 

farming operation, and meets at least 

one of the following to be considered 

significant: 

(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. 

§ 1400.602 Restrictions on active personal 

management contributions. 

(a) If a farming operation includes any 

nonfamily members as specified under 

the provisions of § 1400.201(b)(2) and 

(3) and the farming operation is seeking 

to qualify more than one person as 

providing a significant contribution of 

active personal management then: 

(1) Each such person must maintain 

contemporaneous records or logs as 

specified in § 1400.603; and 

(2) Subject to paragraph (b) of this 

section, if the farming operation seeks 

not more than one additional person to 

qualify as providing a significant 

contribution of active personal 

management because the operation is 

large, then the operation may qualify for 

one such additional person if the 

farming operation: 

(i) Produces and markets crops on 

2,500 acres or more of cropland; or 

(ii) For farming operations that 

produce honey with more than 10,000 

hives; or 

(iii) For farming operations that 

produce wool with more than 3,500 

ewes; and 

(3) If the farming operation seeks not 

more than one additional person to 

qualify as providing a significant 

contribution of active personal 

management because the operation is 

complex, then the operation may qualify 

for one such additional person if the 

farming operation is determined by the 

FSA state committee as complex after 

considering the factors described in 

paragraphs (a)(3)(i) and (ii) of this 

section. Any determination that a 

farming operation is complex by an FSA 

state committee must be reviewed and 

the determination must be concurred by 

DAFP to be applied. To demonstrate 

complexity, the farming operation will 

be required to provide information to 

the FSA state committee on the 

following: 

(i) Number and type of livestock, 

crops, or other agricultural products 

produced and marketing channels used; 

and 

(ii) Geographical area covered. 

(b) FSA state committees may adjust 

the limitations described in paragraph 

(a)(2) of this section up or down by not 

more than 15 percent if the FSA state 

committee determines that the relative 

size of farming operations in the state 

requires a modification of either or both 

of these limitations. If the FSA state 

committee seeks to make a larger 

adjustment, then DAFP will review and 

may approve such request. 

(c) If a farming operation seeks to 

qualify a total of three persons as 

providing a significant contribution of 

active personal management, then the 

farming operation must demonstrate 

both size and complexity as specified in 

paragraph (a) of this section. 

(d) In no case may more than three 

persons in the same farming operation 

qualify as providing a significant 

contribution of active personal 

management, as defined by this subpart. 

(e) A person’s contribution of active 

personal management to a farming 

operation specified in § 1400.601(b) will 

only qualify one member of that farming 

operation as actively engaged in farming 

as defined in this part. Other individual 

persons in the same farming operation 

are not precluded from making 

management contributions, except that 

such contributions will not be 

recognized to meet the requirements of 

being a significant contribution of active 

personal management. 

§ 1400.603 Recordkeeping requirements. 

(a) Any farming operation requesting 

that more than one person qualify as 

making a significant contribution of 

active personal management must 

maintain contemporaneous records or 

activity logs for all persons that make 

any contribution of any management to 

a farming operation under this subpart 

that must include, but are not limited to, 

the following: 

(1) Location where the management 

activity was performed; and 

(2) Time expended and duration of 

the management activity performed. 

(b) To qualify as providing a 

significant contribution of active 

personal management each person 

covered by this subpart must: 

(1) Maintain these records and 

supporting business documentation; 

and 

(2) If requested, timely make these 

records available for review by the 

appropriate FSA reviewing authority. 

(c) If a person fails to meet the 

requirement of paragraphs (a) and (b) of 

this section, then both of the following 

will apply: 

(1) The person’s contribution of active 

personal management as represented to 

the farming operation for payment 

eligibility purposes will be disregarded; 

and 

(2) The person’s payment eligibility 

will be re-determined for the applicable 

program year. 

Dated: March 20, 2015. 

Val Dolcini, 

Executive Vice President, Commodity Credit 

Corporation, and Administrator, Farm 

Service Agency. 

[FR Doc. 2015–06855 Filed 3–25–15; 8:45 am] 

BILLING CODE 3410–05–P 

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