134 
the limitations under this section are applied unless 
the Secretary determines that the change is bona fide 
and substantive. The addition of a family member to 
a farming operation under the criteria set out in sec-
tion 1001A shall be considered a bona fide and sub-
stantive change in the farming operation. 
‘‘(8) DENIAL OF PROGRAM BENEFITS.— 
‘‘(A) TWO YEAR DENIAL OF PAYMENT.—A 
person or legal entity shall be ineligible to re-
ceive payments specified in subsections (b) and 
(c) for that year, and the succeeding crop year, 
in which the Secretary determines that the per-
son or entity engaged in an activity in which the 
primary purpose of the activity was to avoid the 
application of the provisions of this subtitle to 
the person, legal entity or any other person or 
legal entity. 
‘‘(B) EXTENDED
INELIGIBILITY.—If the 
Secretary determines that a person or legal enti-
ty, for their benefit or the benefit of any other 
person or legal entity, has knowingly engaged in, 
or aided in the creation of fraudulent documents, 
failed to disclose material information relevant 
to the administration of this subtitle requested by 
the Secretary, or committed other equally serious 
VerDate Aug 31 2005 
04:05 Jul 24, 2007
Jkt 059200
PO 00000
Frm 00134
Fmt 6652
Sfmt 6203
E:\BILLS\H2419.RH
H2419
cprice-sewell on PRODPC60 with BILLS
135 
actions as identified in regulations issued by the 
Secretary, the Secretary may for a period not to 
exceed five crop years deny the issuance of pay-
ments to the person or legal entity. 
‘‘(C) PRO RATA DENIAL.—Payments other-
wise owed to a person or legal entity covered by 
subparagraphs (A) or (B) shall be denied in a 
pro rata manner based upon the ownership in-
terest of the person or legal entity in a farm, and 
payments otherwise payable to the person or 
legal entity who is a cash rent tenant on a farm 
owned or under the control of such person or 
legal entity shall be denied. 
‘‘(9) DEATH
OF
OWNER.—In the event of a 
transfer of any ownership interest in land or a com-
modity as the result of the death of a program partic-
ipant, the new owner of such land or commodity 
may, if such person is otherwise eligible to participate 
in the applicable program, succeed to the prior own-
er’s contract and receive payments subject to this sec-
tion without regard to the amount of payments re-
ceived by the new owner. Payments made pursuant to 
this subsection shall not exceed the amount to which 
the previous owner was entitled to receive under the 
VerDate Aug 31 2005 
04:05 Jul 24, 2007
Jkt 059200
PO 00000
Frm 00135
Fmt 6652
Sfmt 6203
E:\BILLS\H2419.RH
H2419
cprice-sewell on PRODPC60 with BILLS
136 
terms of the contract at the time of the death of the 
prior owner.’’. 
(c) REPEAL OF THREE-ENTITY RULE.—Section 1001A 
of the Food Security Act of 1985 (7 U.S.C. 1308–1) is 
amended— 
(1) in the section heading, by striking ‘‘PRE-
VENTION OF CREATION OF ENTITIES TO QUAL-
IFY AS SEPARATE PERSONS’’and inserting ‘‘NOTI-
FICATION OF INTERESTS’’; and 
(2) by striking subsection (a) and inserting the 
following new subsection: 
‘‘(a) NOTIFICATION OF INTERESTS.—To facilitate ad-
ministration of sections 1001 and this section, each entity 
or person receiving payments described in subsections (b) 
and (c) of section 1001 as a separate person shall provide 
to the Secretary of Agriculture, at such times and in such 
manner as prescribed by the Secretary, the name and social 
security number of each individual, or the name and tax-
payer identification number of each entity, that holds or 
acquires an ownership interest in such separate person and 
shall provide such information regarding each entity in 
which such separate person holds an ownership interest.’’. 
(d) AMENDMENT FOR CONSISTENCY.—Section 1001A 
of the Food Security Act of 1985 (7 U.S.C. 1308–1) is 
VerDate Aug 31 2005 
04:05 Jul 24, 2007
Jkt 059200
PO 00000
Frm 00136
Fmt 6652
Sfmt 6203
E:\BILLS\H2419.RH
H2419
cprice-sewell on PRODPC60 with BILLS
137 
amended by striking subsection (b) and inserting the fol-
lowing new subsections: 
‘‘(b) ACTIVELY ENGAGED.— 
‘‘(1) IN GENERAL.—To be eligible to receive a 
payment described in subsection (b) and (c) of section 
1001, a person or legal entity must be actively en-
gaged in farming as provided in this subsection or 
subsection (c). 
‘‘(2) CLASSES ACTIVELY ENGAGED.—Except as 
provided in subsections (c) and (d)— 
‘‘(A) a person, including a person partici-
pating in a farming operation as a partner in 
a general partnership, a participant in a joint 
venture, a grantor of a revocable trust, or a par-
ticipant in a similar entity as determined by the 
secretary, shall be considered to be actively en-
gaged in farming with respect to a farm oper-
ation if— 
‘‘(i) the person makes a significant 
contribution (based on the total value of the 
farming operation) to the farming oper-
ation of— 
‘‘(I) capital, equipment, or land; 
and 
VerDate Aug 31 2005 
04:05 Jul 24, 2007
Jkt 059200
PO 00000
Frm 00137
Fmt 6652
Sfmt 6203
E:\BILLS\H2419.RH
H2419
cprice-sewell on PRODPC60 with BILLS
138 
‘‘(II) personal labor or active per-
sonal management; 
‘‘(ii) the person’s share of the profits or 
losses from the farming operation is com-
mensurate with the contributions of the per-
son to the farming operation; and 
‘‘(iii) the contributions of the person 
are at risk; 
‘‘(B) a legal entity that is a corporation, 
joint stock company, association, limited part-
nership, charitable organization, or other similar 
entity determined by the Secretary, including 
any such entity participating in the farming op-
eration as a partner in a general partnership, a 
participant in a joint venture, a grantor of a 
revocable trust, or as a participant in a similar 
entity as determined by the Secretary shall be 
considered as actively engaged in farming with 
respect to a farming operation if— 
‘‘(i) the entity separately makes a sig-
nificant contribution (based on the total 
value of the farming operation) of capital, 
equipment, or land; 
‘‘(ii) the stockholders or members col-
lectively make a significant contribution of 
VerDate Aug 31 2005 
04:05 Jul 24, 2007
Jkt 059200
PO 00000
Frm 00138
Fmt 6652
Sfmt 6203
E:\BILLS\H2419.RH
H2419
cprice-sewell on PRODPC60 with BILLS
139 
personal labor or active personal manage-
ment to the operation; and 
‘‘(iii) the standards provided in clauses 
(ii) and (iii) of paragraph (A), as applied 
to the entity, are met by the entity; 
‘‘(C) if a legal entity that is a general part-
nership, joint venture, or similar entity, as de-
termined by the Secretary, separately makes a 
significant contribution (based on the total value 
of the farming operation involved) of capital, 
equipment, or land, and the standards provided 
in clauses (ii) and (iii) of paragraph (A), as ap-
plied to the entity, are met by the entity, the 
partners or members making a significant con-
tribution of personal labor or active personal 
management shall be considered to be actively 
engaged in farming with respect to the farming 
operation involved; and 
‘‘(D) in making determinations under this 
subsection regarding equipment and personal 
labor, the Secretary shall take into consideration 
the equipment and personal labor normally and 
customarily provided by farm operators in the 
area involved to produce program crops. 
‘‘(c) SPECIAL CLASSES ACTIVELY ENGAGED.— 
VerDate Aug 31 2005 
04:05 Jul 24, 2007
Jkt 059200
PO 00000
Frm 00139
Fmt 6652
Sfmt 6203
E:\BILLS\H2419.RH
H2419
cprice-sewell on PRODPC60 with BILLS