II 

110TH CONGRESS 

1ST SESSION S. 1486 

To amend the Food Security Act of 1985 to restore integrity to and 

strengthen payment limitation rules for commodity payments and benefits. 

IN THE SENATE OF THE UNITED STATES 

MAY 24, 2007 

Mr. DORGAN (for himself and Mr. GRASSLEY) introduced the following bill; 

which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry 

A BILL 

To amend the Food Security Act of 1985 to restore integrity 

to and strengthen payment limitation rules for commodity payments and benefits. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Rural America Preser5 vation Act of 2007’’. 

6 SEC. 2. PAYMENT LIMITATIONS. 

7 Section 1001 of the Food Security of 1985 (7 U.S.C. 

8 1308) is amended— 

9 (1) in subsection (a)— 


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1 (A) by striking paragraphs (1) and (2) and 

2 inserting the following: 

3 ‘‘(1) ENTITY.— 

4 ‘‘(A) IN GENERAL.—The term ‘entity’ 

5 means— 

6 ‘‘(i) an organization that (subject to 

7 the requirements of this section and sec8 tion 1001A) is eligible to receive a pay9 ment under a provision of law referred to 

10 in subsection (b) or (c); 

11 ‘‘(ii) a corporation, joint stock com12 pany, association, limited partnership, lim13 ited liability company, limited liability 

14 partnership, charitable organization, grant15 or of a revocable trust, or other similar en16 tity (as determined by the Secretary); and 

17 ‘‘(iii) an organization that is partici18 pating in a farming operation as a partner 

19 in a general partnership or as a participant 

20 in a joint venture. 

21 ‘‘(B) EXCLUSION.—The term ‘entity’ does 

22 not include a general partnership or joint ven23 ture. 

24 ‘‘(2) INDIVIDUAL.—The term ‘individual’ 

25 means— 


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1 ‘‘(A) a natural person, and any minor child 

2 of the natural person (as determined by the 

3 Secretary), who, subject to the requirements of 

4 this section and section 1001A, is eligible to re5 ceive a payment under a provision of law re6 ferred to in subsection (b), (c), or (d); and 

7 ‘‘(B) a natural person participating in a 

8 farming operation as a partner in a general 

9 partnership, a participant in a joint venture, a 

10 grantor of a revocable trust, or a participant in 

11 a similar entity (as determined by the Sec12 retary).’’; 

13 (2) by striking subsection (b) and inserting the 

14 following: 

15 ‘‘(b) LIMITATION ON DIRECT PAYMENTS.—The total 

16 amount of direct payments that an individual or entity 

17 may receive, directly or indirectly, during any crop year 

18 under subtitle A or C of title I of the Farm Security and 

19 Rural Investment Act of 2002 (7 U.S.C. 7911 et seq.) 

20 for 1 or more covered commodities or peanuts shall not 

21 exceed $20,000.’’; 

22 (3) by striking subsection (c) and inserting the 

23 following: 

24 ‘‘(c) LIMITATION ON COUNTER-CYCLICAL PAY25 MENTS.—The total amount of counter-cyclical payments 


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1 that an individual or entity may receive, directly or indi2 rectly, during any crop year under subtitle A or C of title 

3 I of the Farm Security and Rural Investment Act of 2002 

4 (7 U.S.C. 7911 et seq.) for 1 or more covered commodities 

5 or peanuts shall not exceed $30,000.’’; 

6 (4) by striking subsection (d) and inserting the 

7 following: 

8 ‘‘(d) LIMITATIONS ON MARKETING LOAN GAINS, 

9 LOAN DEFICIENCY PAYMENTS, AND COMMODITY CER10 TIFICATE TRANSACTIONS.—The total amount of the fol11 lowing gains and payments that an individual or entity 

12 may receive during any crop year may not exceed $75,000: 

13 ‘‘(1)(A) Any gain realized by a producer from 

14 repaying a marketing assistance loan for 1 or more 

15 loan commodities under subtitle B of title I of the 

16 Farm Security and Rural Investment Act of 2002 (7 

17 U.S.C. 7931 et seq.) at a lower level than the origi18 nal loan rate established for the loan commodity 

19 under that subtitle. 

20 ‘‘(B) In the case of settlement of a marketing 

21 assistance loan for 1 or more loan commodities 

22 under that subtitle by forfeiture, the amount by 

23 which the loan amount exceeds the repayment 

24 amount for the loan if the loan had been settled by 

25 repayment instead of forfeiture. 


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1 ‘‘(2) Any loan deficiency payments received for 

2 1 or more loan commodities under that subtitle. 

3 ‘‘(3) Any gain realized from the use of a com4 modity certificate issued by the Commodity Credit 

5 Corporation for 1 or more loan commodities, as de6 termined by the Secretary, including the use of a 

7 certificate for the settlement of a marketing assist8 ance loan made under that subtitle or section 1307 

9 of that Act (7 U.S.C. 7957).’’; 

10 (5) by striking subsection (e); 

11 (6) by redesignating subsections (f) and (g) as 

12 subsections (h) and (i), respectively; and 

13 (7) by inserting after subsection (d) the fol14 lowing: 

15 ‘‘(e) PAYMENTS TO INDIVIDUALS AND ENTITIES.— 

16 ‘‘(1) INTERESTS WITHIN SAME ENTITY.—Any 

17 individual or entity that is an owner of an entity, in18 cluding a shareholder, may not collectively receive 

19 payments, directly or indirectly, that are attributable 

20 to the ownership interest in the entity for a crop 

21 year that exceed an amount equal to twice the appli22 cable dollar amounts specified in subsections (b), (c), 

23 and (d). 

24 ‘‘(2) ALL INTERESTS.—An individual or entity 

25 may not receive, directly or indirectly, through all 


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1 ownership interests of the individual or entity, from 

2 all sources, payments for a crop year that exceed an 

3 amount equal to the twice the applicable dollar 

4 amounts specified in subsections (b), (c), and (d). 

5 ‘‘(f) SINGLE FARMING OPERATION.— 

6 ‘‘(1) IN GENERAL.—Notwithstanding sub7 sections (b) through (d), subject to paragraph (2), 

8 if an individual or entity participates only in a single 

9 farming operation and receives, directly or indirectly, 

10 any payment or gain covered by this section through 

11 the farming operation, the total amount of payments 

12 or gains (as applicable) covered by this section that 

13 the individual or entity may receive during any crop 

14 year shall not exceed an amount equal to twice the 

15 applicable dollar amounts specified in subsections 

16 (b), (c), and (d). 

17 ‘‘(2) INDIVIDUALS.—The total amount of pay18 ments or gains (as applicable) covered by this sec19 tion that an individual may receive during any crop 

20 year may not exceed $250,000. 

21 ‘‘(g) SPOUSAL EQUITY.— 

22 ‘‘(1) IN GENERAL.—Notwithstanding sub23 sections (b) through (d), except as provided in para24 graph (2), if an individual and the spouse of the in25 dividual are covered by paragraph (2) and receive, 


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1 directly or indirectly, any payment or gain covered 

2 by this section, the total amount of payments or 

3 gains (as applicable) covered by this section that the 

4 individual and spouse may jointly receive during any 

5 crop year may not exceed an amount equal to twice 

6 the applicable dollar amounts specified in sub7 sections (b), (c), and (d). 

8 ‘‘(2) EXCEPTIONS.— 

9 ‘‘(A) SEPARATE FARMING OPERATIONS.— 

10 In the case of a married couple in which each 

11 spouse, before the marriage, was separately en12 gaged in an unrelated farming operation, each 

13 spouse shall be treated as a separate individual 

14 with respect to a farming operation brought 

15 into the marriage by a spouse, subject to the 

16 condition that the farming operation shall re17 main a separate farming operation, as deter18 mined by the Secretary. 

19 ‘‘(B) ELECTION TO RECEIVE SEPARATE

20 PAYMENTS.—A married couple may elect to re21 ceive payments separately in the name of each 

22 spouse if the total amount of payments and 

23 benefits described in subsections (b), (c), and 

24 (d) that the married couple receives, directly or 

25 indirectly, does not exceed an amount equal to 


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1 twice the applicable dollar amounts specified in 

2 those subsections.’’. 

3 SEC. 3. SUBSTANTIVE CHANGE; PAYMENTS LIMITED TO AC4 TIVE FARMERS. 

5 Section 1001A of the Food Security Act of 1985 (7 

6 U.S.C. 1308–1) is amended— 

7 (1) by striking the section designation and 

8 heading and all that follows through the end of sub9 section (a) and inserting the following: 

10 ‘‘SEC. 1001A. SUBSTANTIVE CHANGE; PAYMENTS LIMITED 

11 TO ACTIVE FARMERS. 

12 ‘‘(a) SUBSTANTIVE CHANGE.— 

13 ‘‘(1) IN GENERAL.—For purposes of the appli14 cation of limitations under this section, the Sec15 retary shall not approve any change in a farming op16 eration that otherwise would increase the number of 

17 individuals or entities (as defined in section 1001(a)) 

18 to which the limitations under this section apply, un19 less the Secretary determines that the change is 

20 bona fide and substantive. 

21 ‘‘(2) FAMILY MEMBERS.—For the purpose of 

22 paragraph (1), the addition of a family member (as 

23 defined in subsection (b)(2)(A)) to a farming oper24 ation under the criteria established under subsection 


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1 (b)(3)(B) shall be considered to be a bona fide and 

2 substantive change in the farming operation. 

3 ‘‘(3) PRIMARY CONTROL.—To prevent a farm 

4 from reorganizing in a manner that is inconsistent 

5 with the purposes of this Act, the Secretary shall 

6 promulgate such regulations as the Secretary deter7 mines to be necessary to attribute payments for a 

8 farming operation to the individual or entity that ex9 ercises primary control over the farming operation, 

10 including to respond to— 

11 ‘‘(A)(i) any instance in which ownership of 

12 a farming operation is transferred to an indi13 vidual or entity under an arrangement that pro14 vides for the sale or exchange of any asset or 

15 ownership interest in 1 or more entities at less 

16 than fair market value; and 

17 ‘‘(ii) the transferor is provided preferential 

18 rights to repurchase the asset or interest at less 

19 than fair market value; or 

20 ‘‘(B) a sale or exchange of any asset or 

21 ownership interest in 1 or more entities under 

22 a financing arrangement under which— 

23 ‘‘(i) financing is provided by the 

24 transferor; and 


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1 ‘‘(ii) the right to exercise control over 

2 the asset or interest is conveyed, directly 

3 or indirectly.’’; 

4 (2) in subsection (b)— 

5 (A) by striking paragraph (1) and insert6 ing the following: 

7 ‘‘(1) IN GENERAL.—To be eligible to receive, di8 rectly or indirectly, payments or benefits described 

9 as being subject to limitation in subsection (b) or (c) 

10 of section 1001 with respect to a particular farming 

11 operation, an individual or entity (as defined in sec12 tion 1001(a)) shall be actively engaged in farming 

13 with respect to the farming operation, in accordance 

14 with paragraphs (2), (3), and (4).’’; 

15 (B) in paragraph (2)— 

16 (i) by striking subparagraphs (A) and 

17 (B) and inserting the following: 

18 ‘‘(A) DEFINITIONS.—In this paragraph: 

19 ‘‘(i) ACTIVE PERSONAL MANAGE20 MENT.—The term ‘active personal manage21 ment’ means, with respect to an individual, 

22 administrative duties carried out by the in23 dividual for a farming operation— 


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1 ‘‘(I) that are personally provided 

2 by the individual on a regular, sub3 stantial, and continuing basis; and 

4 ‘‘(II) relating to the supervision 

5 and direction of— 

6 ‘‘(aa) activities and labor in7 volved in the farming operation; 

8 and 

9 ‘‘(bb) onsite services directly 

10 related and necessary to the 

11 farming operation. 

12 ‘‘(ii) FAMILY MEMBER.—The term 

13 ‘family member’, with respect to an indi14 vidual participating in a farming operation, 

15 means an individual who is related to the 

16 individual as a lineal ancestor, a lineal de17 scendant, or a sibling (including a spouse 

18 of such an individual). 

19 ‘‘(B) ACTIVE ENGAGEMENT.—Except as 

20 provided in paragraph (3), for purposes of 

21 paragraph (1), the following shall apply: 

22 ‘‘(i) An individual shall be considered 

23 to be actively engaged in farming with re24 spect to a farming operation if— 


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1 ‘‘(I) the individual makes a sig2 nificant contribution, as determined 

3 under subparagraph (E) (based on the 

4 total value of the farming operation), 

5 to the farming operation of— 

6 ‘‘(aa) capital, equipment, or 

7 land; and 

8 ‘‘(bb) personal labor and ac9 tive personal management; 

10 ‘‘(II) the share of the individual 

11 of the profits or losses from the farm12 ing operation is commensurate with 

13 the contributions of the individual to 

14 the operation; and 

15 ‘‘(III) a contribution of the indi16 vidual is at risk. 

17 ‘‘(ii) An entity shall shall be consid18 ered to be actively engaged in farming with 

19 respect to a farming operation if— 

20 ‘‘(I) the entity makes a signifi21 cant contribution, as determined 

22 under subparagraph (E) (based on the 

23 total value of the farming operation), 

24 to the farming operation of capital, 

25 equipment, or land; 


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1 ‘‘(II)(aa) the stockholders or 

2 members that collectively own at least 

3 50 percent of the combined beneficial 

4 interest in the entity each make a sig5 nificant contribution of personal labor 

6 and active personal management to 

7 the operation; or 

8 ‘‘(bb) in the case of an entity in 

9 which all of the beneficial interests 

10 are held by family members, any 

11 stockholder or member (or household 

12 comprised of a stockholder or member 

13 and the spouse of the stockholder or 

14 member) who owns at least 10 per15 cent of the beneficial interest in the 

16 entity makes a significant contribution 

17 of personal labor or active personal 

18 management; and 

19 ‘‘(III) the entity meets the re20 quirements of subclauses (II) and 

21 (III) of clause (i).’’; 

22 (ii) in subparagraph (C), by striking 

23 ‘‘clauses (ii) and (iii) of paragraph (A)’’ 

24 and inserting ‘‘subclauses (II) and (III) of 

25 subparagraph (B)(i)’’; and 


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1 (iii) by adding at the end the fol2 lowing: 

3 ‘‘(E) SIGNIFICANT CONTRIBUTION OF PER4 SONAL LABOR OR ACTIVE PERSONAL MANAGE5 MENT.— 

6 ‘‘(i) IN GENERAL.—Subject to clause 

7 (ii), for purposes of subparagraph (B), an 

8 individual shall be considered to be pro9 viding, on behalf of the individual or an 

10 entity, a significant contribution of per11 sonal labor or active personal management, 

12 if the total contribution of personal labor 

13 and active personal management is at least 

14 equal to the lesser of— 

15 ‘‘(I) 1,000 hours; and 

16 ‘‘(II) a period of time equal to— 

17 ‘‘(aa) 50 percent of the com18 mensurate share of the total 

19 number of hours of personal 

20 labor and active personal man21 agement required to conduct the 

22 farming operation; or 

23 ‘‘(bb) in the case of a stock24 holder or member (or household 

25 comprised of a stockholder or 


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1 member and the spouse of the 

2 stockholder or member) that 

3 owns at least 10 percent of the 

4 beneficial interest in an entity in 

5 which all of the beneficial inter6 ests are held by family members, 

7 50 percent of the commensurate 

8 share of hours of the personal 

9 labor and active personal man10 agement of all family members 

11 required to conduct the farming 

12 operation. 

13 ‘‘(ii) MINIMUM LABOR HOURS.—For 

14 the purpose of clause (i), the minimum 

15 number of labor hours required to produce 

16 a commodity shall be equal to the number 

17 of hours that would be necessary to con18 duct a farming operation for the produc19 tion of each commodity that is comparable 

20 in size to the commensurate share of an 

21 individual or entity in the farming oper22 ation for the production of the commodity, 

23 based on the minimum number of hours 

24 per acre required to produce the com25 modity in the State in which the farming 


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1 operation is located, as determined by the 

2 Secretary.’’; 

3 (C) in paragraph (3)— 

4 (i) by striking subparagraph (A) and 

5 inserting the following: 

6 ‘‘(A) LANDOWNERS.—An individual or en7 tity that is a landowner contributing owned 

8 land, and that meets the requirements of sub9 clauses (II) and (III) of paragraph (2)(B)(i), if, 

10 as determined by the Secretary— 

11 ‘‘(i) the landowner share-rents the 

12 land at a rate that is usual and customary; 

13 and 

14 ‘‘(ii) the share received by the land15 owner is commensurate with the share of 

16 the crop or income received as rent.’’; 

17 (ii) in subparagraph (B)— 

18 (I) in the first sentence— 

19 (aa) by striking ‘‘persons’’ 

20 and inserting ‘‘an individual or 

21 entity’’; and 

22 (bb) by striking ‘‘standards 

23 provided in clauses (ii) and (iii) 

24 of paragraph (2)(A)’’ and insert25 ing ‘‘requirements of subclauses 


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1 (II) and (III) of paragraph 

2 (2)(B)(i)’’; and 

3 (II) by striking the second sen4 tence; and 

5 (iii) in subparagraph (C), by striking 

6 ‘‘standards provided in clauses (ii) and (iii) 

7 of paragraph (2)(A)’’ and inserting ‘‘re8 quirements of subclauses (II) and (III) of 

9 paragraph (2)(B)(i)’’; 

10 (D) in paragraph (4)— 

11 (i) in the paragraph heading, by strik12 ing ‘‘PERSONS’’ and inserting ‘‘INDIVID13 UALS AND ENTITIES’’; 

14 (ii) in the matter preceding subpara15 graph (A), by striking ‘‘persons’’ and in16 serting ‘‘individuals and entities’’; and 

17 (iii) by striking subparagraph (B) and 

18 inserting the following: 

19 ‘‘(B) OTHER INDIVIDUALS AND ENTI20 TIES.—Any other individual or entity, or class 

21 of individuals or entities, that fails to meet the 

22 requirements of paragraphs (2) and (3), as de23 termined by the Secretary.’’; 

24 (E) by redesignating paragraphs (5) and 

25 (6) as paragraphs (6) and (7), respectively; 


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1 (F) by inserting after paragraph (4) the 

2 following: 

3 ‘‘(5) PERSONAL LABOR AND ACTIVE PERSONAL

4 MANAGEMENT.—No stockholder or member may 

5 provide personal labor or active personal manage6 ment to meet the requirements of this subsection for 

7 any individual or entity that collectively receives, di8 rectly or indirectly, an amount equal to more than 

9 twice the applicable limits under subsections (b), (c), 

10 and (d) of section 1001.’’; and 

11 (G) in paragraph (6) (as redesignated by 

12 subparagraph (E))— 

13 (i) in the first sentence— 

14 (I) by striking ‘‘A person’’ and 

15 inserting ‘‘An individual or entity’’; 

16 and 

17 (II) by striking ‘‘such person’’ 

18 and inserting ‘‘the individual or enti19 ty’’; and 

20 (ii) by striking the second sentence; 

21 and 

22 (3) by adding at the end the following: 

23 ‘‘(c) NOTIFICATION BY ENTITIES.—To facilitate the 

24 administration of this section, each entity that receives 

25 payments or benefits described as being subject to limitaVerDate Aug 31 2005 19:11 May 27, 2007 Jkt 059196 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S1486.IS S1486

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1 tion in subsection (b), (c), or (d) of section 1001 with re2 spect to a particular farming operation shall— 

3 ‘‘(1) notify each individual or other entity that 

4 acquires or holds a beneficial interest in the farming 

5 operation of the requirements and limitations under 

6 this section; and 

7 ‘‘(2) provide to the Secretary, at such times and 

8 in such manner as may the Secretary may require, 

9 the name and social security number of each indi10 vidual, or the name and taxpayer identification num11 ber of each entity, that holds or acquires such a ben12 eficial interest.’’. 

13 SEC. 4. SCHEMES OR DEVICES. 

14 Section 1001B of the Food Security Act of 1985 (7 

15 U.S.C. 1308–2) is amended— 

16 (1) by inserting ‘‘(a) IN GENERAL.—’’ before 

17 ‘‘If’’; 

18 (2) in subsection (a) (as designated by para19 graph (1)), by striking ‘‘person’’ each place it ap20 pears and inserting ‘‘individual or entity’’; and 

21 (3) by adding at the end the following: 

22 ‘‘(b) FRAUD.—If fraud is committed by an individual 

23 or entity in connection with a scheme or device to evade, 

24 or that has the purpose of evading, section 1001, 1001A, 

25 or 1001C, the individual or entity shall be ineligible to 


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1 receive farm program payments described as being subject 

2 to limitation in subsection (b), (c), or (d) of section 1001 

3 for— 

4 ‘‘(1) the crop year for which the scheme or de5 vice is adopted; and 

6 ‘‘(2) the succeeding 5 crop years.’’. 

7 SEC. 5. FOREIGN INDIVIDUALS AND ENTITIES MADE INELI8 GIBLE FOR PROGRAM BENEFITS. 

9 Section 1001C of the Food Security Act of 1985 (7 

10 U.S.C. 1308–3) is amended— 

11 (1) in the section heading, by striking ‘‘PER12 SONS’’ and inserting ‘‘INDIVIDUALS AND ENTI13 TIES’’; 

14 (2) in subsection (a), by striking ‘‘person’’ each 

15 place it appears and inserting ‘‘individual’’; and 

16 (3) in subsection (b)— 

17 (A) in the subsection heading, by striking 

18 ‘‘CORPORATION OR OTHER’’; and 

19 (B) by striking ‘‘a corporation or other en20 tity’’ and inserting ‘‘an entity’’. 

21 SEC. 6. SENSE OF THE SENATE. 

22 It is the sense of the Senate that any savings achieved 

23 as a result of the amendments made by this Act should 

24 be used to establish a permanent agricultural disaster re25 lief program. 


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1 SEC. 7. REGULATIONS. 

2 (a) IN GENERAL.—The Secretary of Agriculture may 

3 promulgate such regulations as are necessary to imple4 ment this Act and the amendments made by this Act. 

5 (b) PROCEDURE.—The promulgation of the regula6 tions and administration of this Act and the amendments 

7 made by this Act shall be made without regard to— 

8 (1) the notice and comment provisions of sec9 tion 553 of title 5, United States Code; 

10 (2) the Statement of Policy of the Secretary of 

11 Agriculture effective July 24, 1971 (36 Fed. Reg. 

12 13804), relating to notices of proposed rulemaking 

13 and public participation in rulemaking; and 

14 (3) chapter 35 of title 44, United States Code 

15 (commonly known as the ‘‘Paperwork Reduction 

16 Act’’). 

17 (c) CONGRESSIONAL REVIEW OF AGENCY RULE18 MAKING.—In carrying out this section, the Secretary shall 

19 use the authority provided under section 808 of title 5, 

20 United States Code. 

Æ 


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