[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3701 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3701

  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

                             August 4, 2010

 Mr. Grassley (for himself and Mr. Feingold) 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.

    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 ``Rural America Preservation Act of 
2010''.

SEC. 2. PAYMENT LIMITATIONS.

    (a) In General.--Section 1001 of the Food Security of 1985 (7 
U.S.C. 1308) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (2), by striking ``a person'' and 
                inserting ``an individual''; and
                    (B) by striking paragraphs (3) and (4) and 
                inserting the following:
            ``(3) Individual.--The term `individual' means--
                    ``(A) a natural person, and any minor child of the 
                natural person (as determined by the Secretary), who, 
                subject to the requirements of this section and section 
                1001A, is eligible to receive a payment under a 
                provision of law referred to in subsection (b), (c), or 
                (d); and
                    ``(B) a natural person participating 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 participant in a similar entity 
                (as determined by the Secretary).
            ``(4) Legal entity.--
                    ``(A) In general.--The term `legal entity' means--
                            ``(i) an organization that (subject to the 
                        requirements of this section and section 1001A) 
                        is eligible to receive a payment under a 
                        provision of law referred to in subsection (b) 
                        or (c);
                            ``(ii) a corporation, joint stock company, 
                        association, limited partnership, limited 
                        liability company, limited liability 
                        partnership, charitable organization, estate, 
                        irrevocable trust, grantor of a revocable 
                        trust, or other similar entity (as determined 
                        by the Secretary); and
                            ``(iii) an organization that is 
                        participating in a farming operation as a 
                        partner in a general partnership or as a 
                        participant in a joint venture.
                    ``(B) Exclusion.--The term `legal entity' does not 
                include a general partnership or joint venture.
                    ``(C) Estates.--In promulgating regulations to 
                define the term `legal entity' as the term applies to 
                estates, the Secretary shall ensure that fair and 
                equitable treatment is given to estates and the 
                beneficiaries of estates.
                    ``(D) Irrevocable trusts.--In promulgating 
                regulations to define the term `legal entity' as the 
                term applies to irrevocable trusts, the Secretary shall 
                ensure that irrevocable trusts are legitimate entities 
                that have not been created for the purpose of avoiding 
                a payment limitation.'';
            (2) in subsection (b)--
                    (A) by striking ``a person'' each place it appears 
                and inserting ``an individual'';
                    (B) in paragraph (1)(A), by striking ``$40,000'' 
                and inserting ``$20,000'';
                    (C) in paragraphs (2) and (3), by striking ``the 
                person'' each place it appears and inserting ``the 
                individual''; and
                    (D) in paragraphs (2) and (3)(A), by striking 
                ``$65,000'' each place it appears and inserting 
                ``$30,000'';
            (3) in subsection (c)--
                    (A) by striking ``a person'' each place it appears 
                and inserting ``an individual'';
                    (B) in paragraph (1)(A), by striking ``$40,000'' 
                and inserting ``$20,000'';
                    (C) in paragraphs (2) and (3), by striking ``the 
                person'' each place it appears and inserting ``the 
                individual''; and
                    (D) in paragraphs (2) and (3)(A), by striking 
                ``$65,000'' each place it appears and inserting 
                ``$30,000'';
            (4) by striking subsection (d) and inserting the following:
    ``(d) Limitations on Marketing Loan Gains, Loan Deficiency 
Payments, and Commodity Certificate Transactions.--The total amount of 
the following gains and payments that an individual or legal entity may 
receive during any crop year may not exceed $75,000:
            ``(1)(A) Any gain realized by a producer from repaying a 
        marketing assistance loan for 1 or more loan commodities and 
        peanuts under subtitle B or C of title I of the Food, 
        Conservation, and Energy Act of 2008 (7 U.S.C. 8731 et seq.) at 
        a lower level than the original loan rate established for the 
        loan commodity under those subtitles.
            ``(B) In the case of settlement of a marketing assistance 
        loan for 1 or more loan commodities and peanuts under those 
        subtitles by forfeiture, the amount by which the loan amount 
        exceeds the repayment amount for the loan if the loan had been 
        settled by repayment instead of forfeiture.
            ``(2) Any loan deficiency payments received for 1 or more 
        loan commodities and peanuts under those subtitles.
            ``(3) Any gain realized from the use of a commodity 
        certificate issued by the Commodity Credit Corporation for 1 or 
        more loan commodities and peanuts, as determined by the 
        Secretary, including the use of a certificate for the 
        settlement of a marketing assistance loan made under those 
        subtitles or section 1307 of that Act (7 U.S.C. 7957).'';
            (5) by striking subsection (e);
            (6) by redesignating subsections (f), (g), and (h) as 
        subsections (i), (j), and (k), respectively;
            (7) by inserting after subsection (d) the following:
    ``(e) Payments to Individuals and Legal Entities.--Notwithstanding 
subsections (b) through (d), an individual or legal entity may receive, 
directly or indirectly, through all ownership interests of the 
individual or legal entity, from all sources, payments or gains (as 
applicable) for a crop year that shall not exceed an amount equal to 
twice the applicable dollar amounts specified in subsections (b), (c), 
and (d).
    ``(f) Spousal Equity.--
            ``(1) In general.--Notwithstanding subsections (b) through 
        (e), except as provided in paragraph (2), if an individual and 
        the spouse of the individual are covered by paragraph (2) and 
        receive, directly or indirectly, any payment or gain covered by 
        this section, the total amount of payments or gains (as 
        applicable) covered by this section that the individual and 
        spouse may jointly receive during any crop year may not exceed 
        an amount equal to twice the applicable dollar amounts 
        specified in subsections (b), (c), and (d).
            ``(2) Exceptions.--
                    ``(A) Separate farming operations.--In the case of 
                a married couple in which each spouse, before the 
                marriage, was separately engaged in an unrelated 
                farming operation, each spouse shall be treated as a 
                separate individual with respect to a farming operation 
                brought into the marriage by a spouse, subject to the 
                condition that the farming operation shall remain a 
                separate farming operation, as determined by the 
                Secretary.
                    ``(B) Election to receive separate payments.--A 
                married couple may elect to receive payments separately 
                in the name of each spouse if the total amount of 
                payments and benefits described in subsections (b), 
                (c), and (d) that the married couple receives, directly 
                or indirectly, does not exceed an amount equal to twice 
                the applicable dollar amounts specified in those 
                subsections.
    ``(g) Attribution of Payments.--
            ``(1) In general.--The Secretary shall issue such 
        regulations as are necessary to ensure that all payments or 
        gains (as applicable) are attributed to an individual by taking 
        into account the direct and indirect ownership interests of the 
        individual in a legal entity that is eligible to receive such 
        payments or gains (as applicable).
            ``(2) Payments to an individual.--Every payment made 
        directly to an individual shall be combined with the 
        individual's pro rata interest in payments received by a legal 
        entity or entities in which the individual has a direct or 
        indirect ownership interest.
            ``(3) Payments to a legal entity.--
                    ``(A) In general.--Every payment or gain (as 
                applicable) made to a legal entity shall be attributed 
                to those individuals who have a direct or indirect 
                ownership in the legal entity.
                    ``(B) Attribution of payments.--
                            ``(i) Payment limits.--Except as provided 
                        by clause (ii), payments or gains (as 
                        applicable) made to a legal entity shall not 
                        exceed twice the amounts specified in 
                        subsections (b) through (d).
                            ``(ii) Exception.--Payments or gains (as 
                        applicable) made to a joint venture or a 
                        general partnership shall not exceed, for each 
                        payment or gain (as applicable) specified in 
                        subsections (b) through (d), the amount 
                        determined by multiplying twice the maximum 
                        payment amount specified in subsections (b), 
                        (c), and (d) by the number of individuals and 
                        legal entities (other than joint ventures and 
                        general partnerships) that comprise the 
                        ownership of the joint venture or general 
                        partnership.
            ``(4) 4 levels of attribution for embedded legal 
        entities.--
                    ``(A) In general.--Attribution of payments or gains 
                (as applicable) made to legal entities shall be traced 
                through 4 levels of ownership in legal entities.
                    ``(B) First level.--Any payments or gains (as 
                applicable) made to a legal entity (a first-tier legal 
                entity) that is owned in whole or in part by an 
                individual shall be attributed to the individual in an 
                amount that represents the direct ownership in the 
                first-tier legal entity by the individual.
                    ``(C) Second level.--
                            ``(i) In general.--Any payments or gains 
                        (as applicable) made to a first-tier legal 
                        entity that is owned in whole or in part by 
                        another legal entity (a second-tier legal 
                        entity) shall be attributed to the second-tier 
                        legal entity in proportion to the ownership 
                        interest of the second-tier legal entity in the 
                        first-tier legal entity.
                            ``(ii) Ownership by individual.--If the 
                        second-tier legal entity is owned in whole or 
                        in part by an individual, the amount of the 
                        payment made to the first-tier legal entity 
                        shall be attributed to the individual in the 
                        amount the Secretary determines to represent 
                        the indirect ownership in the first-tier legal 
                        entity by the individual.
                    ``(D) Third and fourth levels.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the Secretary shall attribute 
                        payments or gains (as applicable) at the third 
                        and fourth tiers of ownership in the same 
                        manner as specified in subparagraph (C).
                            ``(ii) Fourth-tier ownership by legal 
                        entity.--If the fourth-tier of ownership is 
                        that of a fourth-tier legal entity, the 
                        Secretary shall reduce the amount of the 
                        payment to be made to the first-tier legal 
                        entity in the amount that the Secretary 
                        determines to represent the indirect ownership 
                        in the first-tier legal entity by the fourth-
                        tier legal entity.'';
            (8) in subsection (i) (as redesignated by paragraph (6))--
                    (A) in paragraphs (2) and (7)(A), by striking 
                ``persons'' each place it appears and inserting 
                ``individuals''; and
                    (B) in paragraphs (4)(A) and (8)(A), by striking 
                ``person'' each place it appears and inserting 
                ``individual''; and
            (9) in subsection (k) (as redesignated by paragraph (6)), 
        in the second sentence, by striking ``or other entity'' and 
        inserting ``or legal entity''.
    (b) Conforming Amendments.--
            (1) Section 531 of the Federal Crop Insurance Act (7 U.S.C. 
        1531) is amended--
                    (A) in subsection (f)(4)--
                            (i) in subparagraph (A)--
                                    (I) in the heading, by striking 
                                ``person'' and inserting 
                                ``individual''; and
                                    (II) by striking ``person'' and 
                                inserting ``individual''; and
                            (ii) in subparagraphs (B) and (C), by 
                        striking ``a person'' each place it appears and 
                        inserting ``an individual''; and
                    (B) in subsection (h)--
                            (i) in paragraph (1), in the heading, by 
                        striking ``person'' and inserting 
                        ``individual''; and
                            (ii) in paragraph (2), by striking ``a 
                        person'' and inserting ``an individual''.
            (2) Section 196(i) of the Federal Agriculture Improvement 
        and Reform Act of 1996 (7 U.S.C. 7333(i)) is amended--
                    (A) in paragraph (1), by striking ``person'' and 
                inserting ``individual'';
                    (B) in paragraphs (2) and (5)(B), by striking ``a 
                person'' each place it appears and inserting ``an 
                individual''; and
                    (C) in paragraph (4), by striking ``A person'' and 
                inserting ``An individual''.
            (3) Section 1001D of the Food Security Act of 1985 (7 
        U.S.C. 1308-3a) is amended--
                    (A) by striking ``a person'' each place it appears 
                and inserting ``an individual'';
                    (B) by striking ``the person'' each place it 
                appears and inserting ``the individual'';
                    (C) in subsection (a)(3)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``any person'' and inserting 
                        ``any individual''; and
                            (ii) by striking ``the persons'' each place 
                        it appears and inserting ``the individuals'';
                    (D) in subsection (d)(3), by striking ``persons'' 
                and inserting ``individuals''; and
                    (E) in subsection (e), by striking ``each person'' 
                and inserting ``each individual''.
            (4) Section 1201(a)(19) of the Food Security Act of 1985 
        (16 U.S.C. 3801(a)(19)) is amended--
                    (A) in the heading, by striking ``Person'' and 
                inserting ``Individual''; and
                    (B) by striking ``person'' and inserting 
                ``individual''.
            (5) Section 1234(f) of the Food Security Act of 1985 (16 
        U.S.C. 3834(f)) is amended--
                    (A) in paragraph (1), by striking ``a person'' and 
                inserting ``an individual'';
                    (B) in paragraph (4), by striking ``any person'' 
                and inserting ``any individual''; and
                    (C) by redesignating paragraphs (3) and (4) as 
                paragraphs (2) and (3), respectively.
            (6) Section 1237A(f)(4) of the Food Security Act of 1985 
        (16 U.S.C. 3837a(f)(4)) is amended by striking ``a person'' and 
        inserting ``an individual''.
            (7) Section 1237D(c)(1) of the Food Security Act of 1985 
        (16 U.S.C. 3837d(c)(1)) is amended by striking ``a person'' and 
        inserting ``an individual''.
            (8) Section 1238G(g) of the Food Security Act of 1985 (16 
        U.S.C. 3838g(g)) is amended by striking ``A person'' and 
        inserting ``An individual''.
            (9) Section 1238P(b) of the Food Security Act of 1985 (16 
        U.S.C. 3838p(b)) is amended--
                    (A) in paragraph (2)(B), by striking ``a person'' 
                and inserting ``an individual''; and
                    (B) in paragraph (4)(B), by striking ``a person'' 
                and inserting ``an individual''.
            (10) Section 1240B(i)(3) of the Food Security Act of 1985 
        (16 U.S.C. 3839aa-2(i)(3)) is amended in the first sentence by 
        striking ``a person'' and inserting ``an individual''.
            (11) Section 1240G(a) of the Food Security Act of 1985 (16 
        U.S.C. 3839aa-7) is amended--
                    (A) by striking ``a person'' and inserting ``an 
                individual''; and
                    (B) by striking ``the person'' and inserting ``the 
                individual''.
            (12) Section 1240N(e) of the Food Security Act of 1985 (16 
        U.S.C. 3839bb-1(e)) is amended by striking ``a person'' and 
        inserting ``an individual''.
            (13) Section 901 of the Trade Act of 1974 (19 U.S.C. 2497) 
        is amended--
                    (A) in subsection (f)(4)--
                            (i) in subparagraph (A)--
                                    (I) in the paragraph heading, by 
                                striking ``person'' and inserting 
                                ``individual''; and
                                    (II) by striking ``person'' and 
                                inserting ``individual''; and
                            (ii) in subparagraphs (B) and (C), by 
                        striking ``a person'' each place it appears and 
                        inserting ``an individual''; and
                    (B) in subsection (h)--
                            (i) in paragraph (1), in the heading, by 
                        striking ``person'' and inserting 
                        ``individual''; and
                            (ii) in paragraph (2), by striking ``a 
                        person'' and inserting ``an individual''.

SEC. 3. SUBSTANTIVE CHANGE; PAYMENTS LIMITED TO ACTIVE FARMERS.

    The Food Security Act of 1985 is amended by striking section 1001A 
(7 U.S.C. 1308-1) and inserting the following:

``SEC. 1001A. SUBSTANTIVE CHANGE; PAYMENTS LIMITED TO ACTIVE FARMERS.

    ``(a) Substantive Change.--
            ``(1) In general.--For purposes of the application of 
        limitations under this section, the Secretary shall not approve 
        any change in a farming operation that otherwise would increase 
        the number of individuals or legal entities to which the 
        limitations under this section apply, unless the Secretary 
        determines that the change is bona fide and substantive.
            ``(2) Family members.--For the purpose of paragraph (1), 
        the addition of a family member (as defined in subsection 
        (b)(2)(A)) to a farming operation under the criteria 
        established under subsection (b)(3)(B) shall be considered to 
        be a bona fide and substantive change in the farming operation.
            ``(3) Primary control.--To prevent a farm from reorganizing 
        in a manner that is inconsistent with the purposes of this Act, 
        the Secretary shall promulgate such regulations as the 
        Secretary determines to be necessary to simultaneously 
        attribute payments for a farming operation to more than 1 
        individual or legal entity, including the individual or legal 
        entity that exercises primary control over the farming 
        operation, including to respond to--
                    ``(A)(i) any instance in which ownership of a 
                farming operation is transferred to an individual or 
                legal entity under an arrangement that provides for the 
                sale or exchange of any asset or ownership interest in 
                1 or more legal entities at less than fair market 
                value; and
                    ``(ii) the transferor is provided preferential 
                rights to repurchase the asset or interest at less than 
                fair market value; or
                    ``(B) a sale or exchange of any asset or ownership 
                interest in 1 or more legal entities under an 
                arrangement under which rights to exercise control over 
                the asset or interest are retained, directly or 
                indirectly, by the transferor.
    ``(b) Payments Limited to Active Farmers.--
            ``(1) In general.--To be eligible to receive, directly or 
        indirectly, payments or benefits described as being subject to 
        limitation in subsection (b) through (d) of section 1001 with 
        respect to a particular farming operation, an individual or 
        legal entity (as defined in section 1001(a)) shall be actively 
        engaged in farming with respect to the farming operation, in 
        accordance with paragraphs (2), (3), and (4).
            ``(2) General classes actively engaged in farming.--For 
        purposes of paragraph (1), except as otherwise provided in 
        paragraph (3):
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Active personal management.--The term 
                        `active personal management' means, with 
                        respect to an individual, administrative duties 
                        carried out by the individual for a farming 
                        operation--
                                    ``(I) that are personally provided 
                                by the individual on a regular, 
                                substantial, and continuing basis; and
                                    ``(II) relating to the supervision 
                                and direction of--
                                            ``(aa) activities and labor 
                                        involved in the farming 
                                        operation; and
                                            ``(bb) onsite services 
                                        directly related and necessary 
                                        to the farming operation.
                            ``(ii) Family member.--The term `family 
                        member', with respect to an individual 
                        participating in a farming operation, means an 
                        individual who is related to the individual as 
                        a lineal ancestor, a lineal descendant, or a 
                        sibling (including a spouse of such an 
                        individual).
                    ``(B) Active engagement.--Except as provided in 
                paragraph (3), for purposes of paragraph (1), the 
                following shall apply:
                            ``(i) An individual shall be considered to 
                        be actively engaged in farming with respect to 
                        a farming operation if--
                                    ``(I) the individual makes a 
                                significant contribution, as determined 
                                under subparagraph (E) (based on the 
                                total value of the farming operation), 
                                to the farming operation of--
                                            ``(aa) capital, equipment, 
                                        or land; and
                                            ``(bb) personal labor and 
                                        active personal management;
                                    ``(II) the share of the individual 
                                of the profits or losses from the 
                                farming operation is commensurate with 
                                the contributions of the individual to 
                                the operation; and
                                    ``(III) a contribution of the 
                                individual is at risk.
                            ``(ii) A legal entity shall be considered 
                        to be actively engaged in farming with respect 
                        to a farming operation if--
                                    ``(I) the legal entity makes a 
                                significant contribution, as determined 
                                under subparagraph (E) (based on the 
                                total value of the farming operation), 
                                to the farming operation of capital, 
                                equipment, or land;
                                    ``(II)(aa) the stockholders or 
                                members that collectively own at least 
                                51 percent of the combined beneficial 
                                interest in the legal entity each make 
                                a significant contribution of personal 
                                labor and active personal management to 
                                the operation; or
                                    ``(bb) in the case of a legal 
                                entity in which all of the beneficial 
                                interests are held by family members, 
                                any stockholder or member (or household 
                                comprised of a stockholder or member 
                                and the spouse of the stockholder or 
                                member) who owns at least 10 percent of 
                                the beneficial interest in the legal 
                                entity makes a significant contribution 
                                of personal labor or active personal 
                                management; and
                                    ``(III) the legal entity meets the 
                                requirements of subclauses (II) and 
                                (III) of clause (i).
                    ``(C) Legal entities making significant 
                contributions.--If a general partnership, joint 
                venture, or similar entity (as determined by the 
                Secretary) separately makes a significant contribution 
                (based on the total value of the farming operation 
                involved) of capital, equipment, or land, the partners 
                or members making a significant contribution of 
                personal labor or active personal management and 
                meeting the standards provided in subclauses (II) and 
                (III) of subparagraph (B)(i) shall be considered to be 
                actively engaged in farming with respect to the farming 
                operation involved.
                    ``(D) Equipment and personal labor.--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.
                    ``(E) Significant contribution of personal labor or 
                active personal management.--
                            ``(i) In general.--Subject to clause (ii), 
                        for purposes of subparagraph (B), an individual 
                        shall be considered to be providing, on behalf 
                        of the individual or a legal entity, a 
                        significant contribution of personal labor and 
                        active personal management, if the total 
                        contribution of personal labor and active 
                        personal management is at least equal to the 
                        lesser of--
                                    ``(I) 1,000 hours; and
                                    ``(II) a period of time equal to--
                                            ``(aa) 50 percent of the 
                                        commensurate share of the total 
                                        number of hours of personal 
                                        labor and active personal 
                                        management required to conduct 
                                        the farming operation; or
                                            ``(bb) in the case of a 
                                        stockholder or member (or 
                                        household comprised of a 
                                        stockholder or member and the 
                                        spouse of the stockholder or 
                                        member) that owns at least 10 
                                        percent of the beneficial 
                                        interest in a legal entity in 
                                        which all of the beneficial 
                                        interests are held by family 
                                        members who do not collectively 
                                        receive payments directly or 
                                        indirectly, including payments 
                                        received by spouses, of more 
                                        than twice the applicable 
                                        limit, 50 percent of the 
                                        commensurate share of hours of 
                                        the personal labor and active 
                                        personal management of all 
                                        family members required to 
                                        conduct the farming operation.
                            ``(ii) Minimum labor hours.--For the 
                        purpose of clause (i), the minimum number of 
                        labor hours required to produce a commodity 
                        shall be equal to the number of hours that 
                        would be necessary to conduct a farming 
                        operation for the production of each commodity 
                        that is comparable in size to the commensurate 
                        share of an individual or legal entity in the 
                        farming operation for the production of the 
                        commodity, based on the minimum number of hours 
                        per acre required to produce the commodity in 
                        the State in which the farming operation is 
                        located, as determined by the Secretary.
            ``(3) Special classes actively engaged in farming.--
        Notwithstanding paragraph (2), the following persons shall be 
        considered to be actively engaged in farming with respect to a 
        farm operation:
                    ``(A) Landowners.--An individual or legal entity 
                that is a landowner contributing owned land, and that 
                meets the requirements of subclauses (II) and (III) of 
                paragraph (2)(B)(i), if, as determined by the 
                Secretary--
                            ``(i) the landowner share-rents the land at 
                        a rate that is usual and customary; and
                            ``(ii) the share received by the landowner 
                        is commensurate with the share of the crop or 
                        income received as rent.
                    ``(B) Family members.--With respect to a farming 
                operation conducted by individuals who are family 
                members, or a legal entity the majority of the 
                stockholders or members of which are family members, an 
                adult family member who makes a significant 
                contribution (based on the total value of the farming 
                operation) of active personal management or personal 
                labor and, with respect to such contribution, who meets 
                the requirements of subclauses (II) and (III) of 
                paragraph (2)(B)(i).
                    ``(C) Sharecroppers.--A sharecropper who makes a 
                significant contribution of personal labor to the 
                farming operation and, with respect to such 
                contribution, who meets the requirements of subclauses 
                (II) and (III) of paragraph (2)(B)(i), and who was 
                receiving payments from the landowner as a sharecropper 
                prior to the effective date of the Food, Conservation, 
                and Energy Act of 2008 (Public Law 110-246; 122 Stat. 
                1651).
            ``(4) Individuals and legal entities not actively engaged 
        in farming.--For the purposes of paragraph (1), except as 
        provided in paragraph (3), the following individuals and legal 
        entities shall not be considered to be actively engaged in 
        farming with respect to a farm operation:
                    ``(A) Landlords.--A landlord contributing land to 
                the farming operation if the landlord receives cash 
                rent, or a crop share guaranteed as to the amount of 
                the commodity to be paid in rent, for such use of the 
                land.
                    ``(B) Other individuals and legal entities.--Any 
                other individual or legal entity, or class of 
                individuals or legal entities, that fails to meet the 
                requirements of paragraphs (2) and (3), as determined 
                by the Secretary.
            ``(5) Personal labor and active personal management.--No 
        stockholder or member may provide personal labor or active 
        personal management to meet the requirements of this subsection 
        for individuals or legal entities that collectively receive, 
        directly or indirectly, an amount equal to more than twice the 
        applicable limits under subsections (b), (c), and (d) of 
        section 1001.
            ``(6) Custom farming services.--An individual or legal 
        entity receiving custom farming services will be considered 
        separately eligible for payment limitation purposes if the 
        individual or legal entity is actively engaged in farming based 
        on paragraphs (1) through (3).
            ``(7) Growers of hybrid seed.--To determine whether an 
        individual or legal entity growing hybrid seed under contract 
        shall be considered to be actively engaged in farming, the 
        Secretary shall not take into consideration the existence of a 
        hybrid seed contract.
    ``(c) Notification by Legal Entities.--To facilitate the 
administration of this section, each legal entity that receives 
payments or benefits described as being subject to limitation in 
subsection (b), (c), or (d) of section 1001 with respect to a 
particular farming operation shall--
            ``(1) notify each individual or other legal entity that 
        acquires or holds a beneficial interest in the farming 
        operation of the requirements and limitations under this 
        section; and
            ``(2) provide to the Secretary, at such times and in such 
        manner as the Secretary may require, the name and social 
        security number of each individual, or the name and taxpayer 
        identification number of each legal entity, that holds or 
        acquires such a beneficial interest.''.

SEC. 4. SCHEMES OR DEVICES.

    The Food Security Act of 1985 is amended by striking section 1001B 
(7 U.S.C. 1308-2) and inserting the following:

``SEC. 1001B. SCHEMES OR DEVICES.

    ``(a) In General.--If the Secretary determines that any individual 
or legal entity has adopted a scheme or device to evade, or that has 
the purpose of evading, section 1001, 1001A, or 1001C, such individual 
or legal entity 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 crop year.
    ``(b) Extended Ineligibility.--If the Secretary determines that an 
individual or legal entity, for the benefit of the individual or legal 
entity or of any other individual 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 
actions as identified in regulations issued by the Secretary, the 
Secretary may for a period not to exceed 5 crop years deny the issuance 
of payments to the individual or legal entity.
    ``(c) Fraud.--If fraud is committed by an individual or legal 
entity in connection with a scheme or device to evade, or that has the 
purpose of evading, section 1001, 1001A, or 1001C, the individual or 
legal entity shall be ineligible to receive farm program payments 
described as being subject to limitation in subsection (b), (c), or (d) 
of section 1001 for--
            ``(1) the crop year for which the scheme or device is 
        adopted; and
            ``(2) the succeeding 5 crop years.
    ``(d) Joint and Several Liability.--Any individual or legal entity 
that participates in a scheme or device described in subsection (a) or 
(b) shall be jointly and severally liable for any and all overpayments 
resulting from the scheme or device, and subject to program 
ineligibility resulting from the scheme or device, regardless of 
whether a particular individual or legal entity was a payment 
recipient.
    ``(e) Waiver Authority.--
            ``(1) In general.--The Secretary may fully or partially 
        release an individual or legal entity from liability for 
        repayment of program proceeds under subsection (d) if the 
        individual or legal entity cooperates with the Department of 
        Agriculture by disclosing a scheme or device to evade section 
        1001, 1001A, or 1001C or any other provision of law 
        administered by the Secretary that imposes a payment 
        limitation.
            ``(2) Discretion.--The decision of the Secretary under this 
        subsection is vested in the sole discretion of the 
        Secretary.''.

SEC. 5. FOREIGN INDIVIDUALS AND LEGAL ENTITIES MADE INELIGIBLE FOR 
              PROGRAM BENEFITS.

    Section 1001C of the Food Security Act of 1985 (7 U.S.C. 1308-3) is 
amended--
            (1) in the section heading, by striking ``persons'' and 
        inserting ``individuals and legal entities'';
            (2) in subsection (a), by striking ``person'' each place it 
        appears and inserting ``individual'';
            (3) in subsection (b)--
                    (A) in the subsection heading, by striking 
                ``Corporation or Other'' and inserting ``Legal'';
                    (B) in the first sentence--
                            (i) by striking ``a corporation or other 
                        entity shall be considered a person that'' and 
                        inserting ``a legal entity''; and
                            (ii) by striking ``persons'' both places it 
                        appears and inserting ``individuals''; and
                    (C) in the second sentence, by striking ``an 
                entity'' and inserting ``a legal entity''; and
            (4) in subsection (c), by striking ``person'' and inserting 
        ``legal entity or individual''.

SEC. 6. REGULATIONS.

    (a) In General.--The Secretary of Agriculture may promulgate such 
regulations as are necessary to implement this Act and the amendments 
made by this Act.
    (b) Procedure.--The promulgation of the regulations and 
administration of this Act and the amendments made by this Act shall be 
made 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'').
    (c) 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.
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