HR 124 - Farm Programs Payment Limitation Integrity Act

110th CONGRESS
1st Session

H. R. 124

To require the prompt issuance by the Secretary of Agriculture of regulations to restore integrity to the payment limitation requirements applicable to commodity payments and benefits, to reduce waste, fraud, and abuse related to the receipt of commodity payments and benefits, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

January 4, 2007

Mr. FORTENBERRY (for himself and Ms. HERSETH) introduced the following bill; which was referred to the Committee on Agriculture

A BILL

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Farm Programs Payment Limitation Integrity Act'.

SEC. 2. ISSUANCE OF REGULATIONS TO ESTABLISH MEASURABLE STANDARDS TO PREVENT USE OF SEPARATE ENTITIES TO EXCEED PAYMENT LIMITATIONS APPLICABLE TO COMMODITY PAYMENTS AND TO LIMIT PAYMENTS TO ACTIVE FARMERS.

(a) Standards Regarding Active Personal Management and Evasion Schemes and Devices- The Secretary of Agriculture (in this section referred to as the `Secretary') shall promulgate regulations to establish measurable standards of--

(1) what constitutes a significant contribution of active personal management with respect to a farm operation for purposes of applying the payment limitations specified in section 1001 of the Food Security of 1985 (7 U.S.C. 1308); and

(2) what constitutes a scheme or device to effectively evade such payment limits or to evade section 1001A or 1001C of such Act (7 U.S.C. 1308-1, 1308-3).

(b) Enforcement of Multiple Entity Limitations- The Secretary shall promulgate regulations to ensure that total payments and gains described in section 1001 of the Food Security of 1985 made to or through joint operations or multiple entities under the primary control of a person, in combination with the payments and gains received directly by the person, do not exceed twice the applicable dollar amounts specified in subsections (b), (c), and (d) of such section.

(c) Attribution of Payments and Gains Derived From Certain Farming Operations- In the case of a person that in the aggregate owns, conducts farming operations, or provides custom farming services on land with respect to which the aggregate commodity payments exceed the applicable dollar amounts specified in subsections (b), (c), and (d) of section 1001 of the Food Security of 1985, the Secretary shall promulgate regulations to ensure that all payments and gains made on crops produced on the land are attributed as follows:

(1) To a person that rents land as lessee or lessor through a crop share lease and receives a share of the payments that is less than the usual and customary share of the crop received by the lessee or lessor, as determined by the Secretary.

(2) To a person that provides custom farming services through arrangements under which--

(A) all or part of the compensation for the services is at risk;

(B) farm management services are provided by--

(i) the same person;

(ii) an immediate family member; or

(iii) an entity or individual that has a business relationship that is not an arm's length relationship, as determined by the Secretary; or

(i) the same person;

(ii) an immediate family member; or

(iii) an entity or individual that has a business relationship that is not an arm's length relationship, as determined by the Secretary.

(3) To a person under such other arrangements as the Secretary determines are established to transfer payments from persons that would otherwise exceed the applicable dollar amounts specified in subsections (b), (c), and (d) of such section.

(4) To the direct recipient of the commodity payments as well as to the person to whom the payments are attributed under paragraph (1), (2), or (3).

(d) Primary Control- In the regulations required by this section, the Secretary shall define `primary control' to include a joint operation or multiple entity in which a person owns an interest that is equal to or greater than the interest of any other one or more persons that materially participate on a regular, substantial, and continuous basis in the management of the operation or entity.

(e) Material Participation- In the regulations required by this section, the Secretary shall ensure that the standards for active personal management require no less involvement than the standard for materially participating on a regular, substantial, and continuous basis in the management of the operation or entity as defined by Treasury regulation section 1.469-5T(a)(1), as in effect on the date of the enactment of this Act.

(f) Time for Issuance; Procedure- The regulations required by this section shall be issued in final form not later than 270 days after the date of the enactment of this Act. To ensure compliance with this deadline, the Secretary shall issue the regulations without regard to--

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

(2) the Statement of Policy of the Secretary of Agriculture effective July 24, 1971 (36 Fed. Reg. 13804), relating to notices of proposed rulemaking and public participation in rulemaking; and

(3) chapter 35 of title 44, United States Code (commonly known as the Paperwork Reduction Act).

(g) Congressional Review of Agency Rulemaking- In carrying out this section, the Secretary shall use the authority provided under section 808 of title 5, United States Code.

SEC. 3. PREVENTION OF SCHEMES OR DEVICES TO EVADE PAYMENT LIMITATIONS.

Section 1001B of the Food Security Act of 1985 (7 U.S.C. 1308-2) is amended--

(1) by striking `If' and inserting `(a) Basic Penalty for Evasion of Payment Limitations- Subject to subsection (b), if'; and

(2) by adding at the end the following new subsection:

`(b) Effect of Fraud- If the Secretary determines that a person has committed fraud in connection with the adoption of a scheme or device to evade, or that has the purpose of evading, section 1001, 1001A, or 1001C, the person shall be ineligible to receive farm program payments (as described in subsections (b), (c), and (d) of section 1001 as being subject to limitation) applicable to the crop year for which the scheme or device was adopted and the succeeding five crop years.'.

END