II 

108TH CONGRESS 

2D SESSION S. 2456 

To provide emergency disaster assistance to agricultural producers, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 20, 2004 

Mr. BAUCUS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To provide emergency disaster assistance to agricultural 

producers, and for other purposes. 

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 ‘‘Emergency Agricul5 tural Disaster Assistance Act of 2004’’. 

6 TITLE I—PROVISION OF 

7 ASSISTANCE 

8 SEC. 101. CROP DISASTER ASSISTANCE. 

9 (a) IN GENERAL.—Notwithstanding section 

10 508(b)(7) of the Federal Crop Insurance Act (7 U.S.C. 
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1 1508(b)(7)), the Secretary of Agriculture (referred to in 

2 this title as the ‘‘Secretary’’) shall use such sums as are 

3 necessary of funds of the Commodity Credit Corporation 

4 to make crop disaster assistance authorized under this sec5 tion available to producers on a farm that have incurred 

6 qualifying crop losses for the 2003 or 2004 crop, or both, 

7 due to damaging weather or related condition, as deter8 mined by the Secretary. 

9 (b) ADMINISTRATION.—The Secretary shall make as10 sistance available under this section in the same manner 

11 as provided under section 815 of the Agriculture, Rural 

12 Development, Food and Drug Administration, and Re13 lated Agencies Appropriations Act, 2001 (Public Law 

14 106–387; 114 Stat. 1549A–55), including using the same 

15 loss thresholds for the quantity and quality losses as were 

16 used in administering that section. 

17 SEC. 102. LIVESTOCK ASSISTANCE PROGRAM. 

18 (a) IN GENERAL.—The Secretary shall use such 

19 sums as are necessary of funds of the Commodity Credit 

20 Corporation to make and administer payments for live21 stock losses to producers for 2003 and 2004 losses in a 

22 county that has received an emergency designation by the 

23 President or the Secretary after January 1, 2003, and 

24 January 1, 2004, respectively, of which an amount deter25 mined by the Secretary shall be made available for the 
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1 American Indian livestock program under section 806 of 

2 the Agriculture, Rural Development, Food and Drug Ad3 ministration, and Related Agencies Appropriations Act, 

4 2001 (Public Law 106–387; 114 Stat. 1549A–51). 

5 (b) ADMINISTRATION.—The Secretary shall make as6 sistance available under this section in the same manner 

7 as provided under section 806 of the Agriculture, Rural 

8 Development, Food and Drug Administration, and Re9 lated Agencies Appropriations Act, 2001 (Public Law 

10 105–277; 114 Stat. 1549A–51). 

11 SEC. 103. COMMODITY CREDIT CORPORATION. 

12 The Secretary shall use the funds, facilities, and au13 thorities of the Commodity Credit Corporation to carry 

14 out this title. 

15 SEC. 104. REGULATIONS. 

16 (a) IN GENERAL.—The Secretary may promulgate 

17 such regulations as are necessary to implement this title. 

18 (b) PROCEDURE.—The promulgation of the regula19 tions and administration of this title shall be made without 

20 regard to— 

21 (1) the notice and comment provisions of sec22 tion 553 of title 5, United States Code; 

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

24 Agriculture effective July 24, 1971 (36 Fed. Reg. 
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1 13804), relating to notices of proposed rulemaking 

2 and public participation in rulemaking; and 

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

4 (commonly known as the ‘‘Paperwork Reduction 

5 Act’’). 

6 (c) CONGRESSIONAL REVIEW OF AGENCY RULE7 MAKING.—In carrying out this section, the Secretary shall 

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

9 United States Code. 

10 TITLE II—TAX RELIEF 

11 SEC. 201. SPECIAL RULES FOR LIVESTOCK SOLD ON AC12 COUNT OF WEATHER-RELATED CONDITIONS. 

13 (a) REPLACEMENT OF LIVESTOCK WITH OTHER

14 FARM PROPERTY.—Subsection (f) of section 1033 of the 

15 Internal Revenue Code of 1986 (relating to involuntary 

16 conversions) is amended— 

17 (1) by inserting ‘‘drought, flood, or other 

18 weather-related conditions, or’’ after ‘‘because of’’, 

19 (2) by inserting ‘‘in the case of soil contamina20 tion or other environmental contamination’’ after 

21 ‘‘including real property’’, and 

22 (3) by striking ‘‘WHERE THERE HAS BEEN

23 ENVIRONMENTAL CONTAMINATION’’ in the heading 

24 and inserting ‘‘IN CERTAIN CASES’’. 
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1 (b) EXTENSION OF REPLACEMENT PERIOD OF IN2 VOLUNTARILY CONVERTED LIVESTOCK.—Subsection (e) 

3 of section 1033 of the Internal Revenue Code of 1986 (re4 lating to involuntary conversions) is amended— 

5 (1) by striking ‘‘CONDITIONS.—For purposes’’ 

6 and inserting ‘‘CONDITIONS.— 

7 ‘‘(1) IN GENERAL.—For purposes’’, and 

8 (2) by adding at the end the following new 

9 paragraph: 

10 ‘‘(2) EXTENSION OF REPLACEMENT PERIOD.— 

11 ‘‘(A) IN GENERAL.—In the case of 

12 drought, flood, or other weather-related condi13 tions described in paragraph (1) which result in 

14 the area being designated as eligible for assist15 ance by the Federal Government, subsection 

16 (a)(2)(B) shall be applied with respect to any 

17 converted property by substituting ‘4 years’ for 

18 ‘2 years’. 

19 ‘‘(B) FURTHER EXTENSION BY SEC20 RETARY.—The Secretary may extend on a re21 gional basis the period for replacement under 

22 this section (after the application of subpara23 graph (A)) for such additional time as the Sec24 retary determines appropriate if the weather-re-
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1 lated conditions which resulted in such applica2 tion continue for more than 3 years.’’. 

3 (c) INCOME INCLUSION RULES.—Section 451(e) of 

4 the Internal Revenue Code of 1986 (relating to special 

5 rule for proceeds from livestock sold on account of 

6 drought, flood, or other weather-related conditions) is 

7 amended by adding at the end the following new para8 graph: 

9 ‘‘(3) SPECIAL ELECTION RULES.—If section 

10 1033(e)(2) applies to a sale or exchange of livestock 

11 described in paragraph (1), the election under para12 graph (1) shall be deemed valid if made during the 

13 replacement period described in such section.’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2001. 

17 SEC. 202. FARM, FISHING, AND RANCH RISK MANAGEMENT 

18 ACCOUNTS. 

19 (a) IN GENERAL.—Subpart C of part II of sub20 chapter E of chapter 1 of the Internal Revenue Code of 

21 1986 (relating to taxable year for which deductions taken) 

22 is amended by inserting after section 468B the following 

23 new section: 
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1 ‘‘SEC. 468C. FARM, FISHING, AND RANCH RISK MANAGE2 MENT ACCOUNTS. 

3 ‘‘(a) DEDUCTION ALLOWED.—In the case of an indi4 vidual engaged in an eligible farming business or commer5 cial fishing, there shall be allowed as a deduction for any 

6 taxable year the amount paid in cash by the taxpayer dur7 ing the taxable year to a Farm, Fishing, and Ranch Risk 

8 Management Account (hereinafter referred to as the 

9 ‘FFARRM Account’). 

10 ‘‘(b) LIMITATIONS.— 

11 ‘‘(1) CONTRIBUTIONS.—The amount which a 

12 taxpayer may pay into the FFARRM Account for 

13 any taxable year shall not exceed 20 percent of so 

14 much of the taxable income of the taxpayer (deter15 mined without regard to this section) which is at16 tributable (determined in the manner applicable 

17 under section 1301) to any eligible farming business 

18 or commercial fishing. 

19 ‘‘(2) DISTRIBUTIONS.—Distributions from a 

20 FFARRM Account may not be used to purchase, 

21 lease, or finance any new fishing vessel, add capacity 

22 to any fishery, or otherwise contribute to the over23 capitalization of any fishery. The Secretary of Com24 merce shall implement regulations to enforce this 

25 paragraph. 
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1 ‘‘(c) ELIGIBLE BUSINESSES.—For purposes of this 

2 section— 

3 ‘‘(1) ELIGIBLE FARMING BUSINESS.—The term 

4 ‘eligible farming business’ means any farming busi5 ness (as defined in section 263A(e)(4)) which is not 

6 a passive activity (within the meaning of section 

7 469(c)) of the taxpayer. 

8 ‘‘(2) COMMERCIAL FISHING.—The term ‘com9 mercial fishing’ has the meaning given such term by 

10 section (3) of the Magnuson-Stevens Fishery Con11 servation and Management Act (16 U.S.C. 1802) 

12 but only if such fishing is not a passive activity 

13 (within the meaning of section 469(c)) of the tax14 payer. 

15 ‘‘(d) FFARRM ACCOUNT.—For purposes of this sec16 tion— 

17 ‘‘(1) IN GENERAL.—The term ‘FFARRM Ac18 count’ means a trust created or organized in the 

19 United States for the exclusive benefit of the tax20 payer, but only if the written governing instrument 

21 creating the trust meets the following requirements: 

22 ‘‘(A) No contribution will be accepted for 

23 any taxable year in excess of the amount al24 lowed as a deduction under subsection (a) for 

25 such year. 
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1 ‘‘(B) The trustee is a bank (as defined in 

2 section 408(n)) or another person who dem3 onstrates to the satisfaction of the Secretary 

4 that the manner in which such person will ad5 minister the trust will be consistent with the re6 quirements of this section. 

7 ‘‘(C) The assets of the trust consist en8 tirely of cash or of obligations which have ade9 quate stated interest (as defined in section 

10 1274(c)(2)) and which pay such interest not 

11 less often than annually. 

12 ‘‘(D) All income of the trust is distributed 

13 currently to the grantor. 

14 ‘‘(E) The assets of the trust will not be 

15 commingled with other property except in a 

16 common trust fund or common investment 

17 fund. 

18 ‘‘(2) ACCOUNT TAXED AS GRANTOR TRUST.— 

19 The grantor of a FFARRM Account shall be treated 

20 for purposes of this title as the owner of such Ac21 count and shall be subject to tax thereon in accord22 ance with subpart E of part I of subchapter J of 

23 this chapter (relating to grantors and others treated 

24 as substantial owners). 

25 ‘‘(e) INCLUSION OF AMOUNTS DISTRIBUTED.— 
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), there shall be includible in the gross in3 come of the taxpayer for any taxable year— 

4 ‘‘(A) any amount distributed from a 

5 FFARRM Account of the taxpayer during such 

6 taxable year, and 

7 ‘‘(B) any deemed distribution under— 

8 ‘‘(i) subsection (f )(1) (relating to de9 posits not distributed within 5 years), 

10 ‘‘(ii) subsection (f )(2) (relating to ces11 sation in eligible farming business), and 

12 ‘‘(iii) subparagraph (B) or (C) of sub13 section (f )(3) (relating to prohibited trans14 actions and pledging account as security). 

15 ‘‘(2) EXCEPTIONS.—Paragraph (1)(A) shall not 

16 apply to— 

17 ‘‘(A) any distribution to the extent attrib18 utable to income of the Account, and 

19 ‘‘(B) the distribution of any contribution 

20 paid during a taxable year to a FFARRM Ac21 count to the extent that such contribution ex22 ceeds the limitation applicable under subsection 

23 (b)(1) if requirements similar to the require24 ments of section 408(d)(4) are met. 
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1 For purposes of subparagraph (A), distributions 

2 shall be treated as first attributable to income and 

3 then to other amounts. 

4 ‘‘(f ) SPECIAL RULES.— 

5 ‘‘(1) TAX ON DEPOSITS IN ACCOUNT WHICH

6 ARE NOT DISTRIBUTED WITHIN 5 YEARS.— 

7 ‘‘(A) IN GENERAL.—If, at the close of any 

8 taxable year, there is a nonqualified balance in 

9 any FFARRM Account— 

10 ‘‘(i) there shall be deemed distributed 

11 from such Account during such taxable 

12 year an amount equal to such balance, and 

13 ‘‘(ii) the taxpayer’s tax imposed by 

14 this chapter for such taxable year shall be 

15 increased by 10 percent of such deemed 

16 distribution. 

17 The preceding sentence shall not apply if an 

18 amount equal to such nonqualified balance is 

19 distributed from such Account to the taxpayer 

20 before the due date (including extensions) for 

21 filing the return of tax imposed by this chapter 

22 for such year (or, if earlier, the date the tax23 payer files such return for such year). 

24 ‘‘(B) NONQUALIFIED BALANCE.—For pur25 poses of subparagraph (A), the term ‘non-
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1 qualified balance’ means any balance in the Ac2 count on the last day of the taxable year which 

3 is attributable to amounts deposited in such Ac4 count before the 4th preceding taxable year. 

5 ‘‘(C) ORDERING RULE.—For purposes of 

6 this paragraph, distributions from a FFARRM 

7 Account (other than distributions of current in8 come) shall be treated as made from deposits in 

9 the order in which such deposits were made, be10 ginning with the earliest deposits. 

11 ‘‘(2) CESSATION IN ELIGIBLE BUSINESS.—At 

12 the close of the first disqualification period after a 

13 period for which the taxpayer was engaged in an eli14 gible farming business or commercial fishing, there 

15 shall be deemed distributed from the FFARRM Ac16 count of the taxpayer an amount equal to the bal17 ance in such Account (if any) at the close of such 

18 disqualification period. For purposes of the pre19 ceding sentence, the term ‘disqualification period’ 

20 means any period of 2 consecutive taxable years for 

21 which the taxpayer is not engaged in an eligible 

22 farming business or commercial fishing. 

23 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 

24 to the following rules shall apply for purposes of this 

25 section: 
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1 ‘‘(A) Section 220(f )(8) (relating to treat2 ment after death of account holder). 

3 ‘‘(B) Section 408(e)(2) (relating to loss of 

4 exemption of account where individual engages 

5 in prohibited transaction). 

6 ‘‘(C) Section 408(e)(4) (relating to effect 

7 of pledging account as security). 

8 ‘‘(D) Section 408(g) (relating to commu9 nity property laws). 

10 ‘‘(E) Section 408(h) (relating to custodial 

11 accounts). 

12 ‘‘(4) TIME WHEN PAYMENTS DEEMED MADE.— 

13 For purposes of this section, a taxpayer shall be 

14 deemed to have made a payment to a FFARRM Ac15 count on the last day of a taxable year if such pay16 ment is made on account of such taxable year and 

17 is made on or before the due date (without regard 

18 to extensions) for filing the return of tax for such 

19 taxable year. 

20 ‘‘(5) INDIVIDUAL.—For purposes of this sec21 tion, the term ‘individual’ shall not include an estate 

22 or trust. 

23 ‘‘(6) DEDUCTION NOT ALLOWED FOR SELF-EM24 PLOYMENT TAX.—The deduction allowable by reason 

25 of subsection (a) shall not be taken into account in 
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1 determining an individual’s net earnings from self2 employment (within the meaning of section 1402(a)) 

3 for purposes of chapter 2. 

4 ‘‘(g) REPORTS.—The trustee of a FFARRM Account 

5 shall make such reports regarding such Account to the 

6 Secretary and to the person for whose benefit the Account 

7 is maintained with respect to contributions, distributions, 

8 and such other matters as the Secretary may require 

9 under regulations. The reports required by this subsection 

10 shall be filed at such time and in such manner and fur11 nished to such persons at such time and in such manner 

12 as may be required by such regulations.’’. 

13 (b) TAX ON EXCESS CONTRIBUTIONS.— 

14 (1) Subsection (a) of section 4973 of the Inter15 nal Revenue Code of 1986 (relating to tax on excess 

16 contributions to certain tax-favored accounts and an17 nuities) is amended by striking ‘‘or’’ at the end of 

18 paragraph (4), by adding ‘‘or’’ at the end of para19 graph (5), and by inserting after paragraph (5) the 

20 following new paragraph: 

21 ‘‘(6) a FFARRM Account (within the meaning 

22 of section 468C(d)),’’. 

23 (2) Section 4973 of such Code is amended by 

24 adding at the end the following new subsection: 
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1 ‘‘(h) EXCESS CONTRIBUTIONS TO FFARRM AC2 COUNTS.—For purposes of this section, in the case of a 

3 FFARRM Account (within the meaning of section 

4 468C(d)), the term ‘excess contributions’ means the 

5 amount by which the amount contributed for the taxable 

6 year to the Account exceeds the amount which may be con7 tributed to the Account under section 468C(b)(1) for such 

8 taxable year. For purposes of this subsection, any con9 tribution which is distributed out of the FFARRM Ac10 count in a distribution to which section 468C(e)(2)(B) ap11 plies shall be treated as an amount not contributed.’’. 

12 (c) TAX ON PROHIBITED TRANSACTIONS.— 

13 (1) Subsection (c) of section 4975 of the Inter14 nal Revenue Code of 1986 (relating to tax on pro15 hibited transactions) is amended by adding at the 

16 end the following new paragraph: 

17 ‘‘(7) SPECIAL RULE FOR FFARRM ACCOUNTS.— 

18 A person for whose benefit a FFARRM Account 

19 (within the meaning of section 468C(d)) is estab20 lished shall be exempt from the tax imposed by this 

21 section with respect to any transaction concerning 

22 such account (which would otherwise be taxable 

23 under this section) if, with respect to such trans24 action, the account ceases to be a FFARRM Ac-
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1 count by reason of the application of section 

2 468C(f )(3)(A) to such account.’’. 

3 (2) Paragraph (1) of section 4975(e) of such 

4 Code is amended by redesignating subparagraphs 

5 (F) and (G) as subparagraphs (G) and (H), respec6 tively, and by inserting after subparagraph (E) the 

7 following new subparagraph: 

8 ‘‘(F) a FFARRM Account described in 

9 section 468C(d),’’. 

10 (d) FAILURE TO PROVIDE REPORTS ON FFARRM 

11 ACCOUNTS.—Paragraph (2) of section 6693(a) of the In12 ternal Revenue Code of 1986 (relating to failure to provide 

13 reports on certain tax-favored accounts or annuities) is 

14 amended by redesignating subparagraphs (C) and (D) as 

15 subparagraphs (D) and (E), respectively, and by inserting 

16 after subparagraph (B) the following new subparagraph: 

17 ‘‘(C) section 468C(g) (relating to 

18 FFARRM Accounts),’’. 

19 (e) CLERICAL AMENDMENT.—The table of sections 

20 for subpart C of part II of subchapter E of chapter 1 of 

21 the Internal Revenue Code of 1986 is amended by insert22 ing after the item relating to section 468B the following 

23 new item: 

‘‘Sec. 468C. Farm, Fishing and Ranch Risk Management Accounts.’’. 
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1 (f ) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

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