PAYMENTS LIMITED TO ACTIVE FARMERS.

SEC. 1302. PAYMENTS LIMITED TO ACTIVE FARMERS. Effective beginning with the 1989 crops, section 1001A of the Food Security Act of 1985, as added by section 1301, is amended by adding at the end the following: “(b) Payments Limited to Active Farmers.— “(1) In general.— To be separately eligible for farm program payments (as described in paragraphs (1) and (2) of section 1001 as being subject to limitation) under the Agricultural Act of 1949 with respect to a particular farming operation (whether in the person’s own right or as a partner in a general partnership, a grantor of a revocable trust, a participant in a joint venture, or a participant in a similar entity (as determined by the Secretary) that is the producer of the crops involved), a person must be an individual or entity described in section 1001(5)(B)(i) and actively engaged in farming with respect to such operation, as provided under paragraphs (2), (3), and (4). “(2) General classes actively engaged in farming.33Copy read “Classes Actively Engaged In Farming”.— For the purposes of paragraph (1), except as otherwise provided in paragraph (3): “(A) Individuals.— An individual shall be considered to be actively engaged in farming with respect to a farm operation if— “(i) the individual makes a significant contribution (based on the total value of the farming operation) of— “(I) capital, equipment, or land; and “(II) personal labor or active personal management; to the farming operation; and “(ii) the individual’s share of the profits or losses from the farming operation is commensurate with the individual’s contributions to the operation; and “(iii) the individual’s contributions are at risk. “(B) Corporations or other entities.— A corporation or other entity described in section 1001(5)(B)(i)(II) shall be considered as actively engaged in farming with respect to a farming operation if— (i) the entity separately makes a significant contribution (based on the total value of the farming operation) of capital, equipment, or land; “(ii) the stockholders or members collectively make a significant contribution of personal labor or active personal management 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) 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, and the standards provided in clauses (ii) and (iii) of paragraph (A), as applied to the entity, are met by the entity, the partners101 STAT. 1330–15 or members making a significant contribution of personal labor or active personal management 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. "(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.— A person that is a landowner contributing the owned land to the farming operation if the landowner receives rent or income for such use of the land based on the land’s production or the operation’s operating results, and the person meets the standard provided in clauses (ii) and (iii) of paragraph (2)(A). “(B) Family members.— With respect to a farming operation conducted by persons, a majority of whom are individuals who 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 standards provided in clauses (ii) and (iii) of paragraph (2)(A). For the purposes of the preceding sentence, the term ‘family member’ means an individual to whom another family member in the farming operation is related as lineal ancestor, lineal descendant, or sibling (including the spouses of those family members who do not make a significant contribution themselves). “(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 standards provided in clauses (ii) and (iii) of paragraph (2)(A). “(4) Persons not actively engaged in farming.— For the purposes of paragraph (1), except as provided in paragraph (3), the following persons 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 persons.— Any other person, or class of persons, determined by the Secretary as failing to meet the standards set out in paragraphs (2) and (3). “(5) Custom farming services.— A person receiving custom farming services will be considered separately eligible for payment limitation purposes if such person is actively engaged in farming based on paragraphs (1) through (3). No other rules with respect to custom farming shall apply.”.