7 U.S.C. § 1308: Payment limitations

The term “covered commodity” has the meaning given that term in section 1111 of the Agricultural Act of 2014 ( 7 U.S.C. 9011 ). The term “family member” means a person to whom a member in the farming operation is related as lineal ancestor, lineal descendant, sibling, first cousin, niece, nephew, spouse, or otherwise by marriage. owns land or an agricultural commodity; or produces an agricultural commodity. The term “person” means a natural person, and does not include a legal entity. a partnership (within the meaning of subchapter K of chapter 1 of the Internal Revenue Code of 1986 [ 26 U.S.C. 701 et seq.]); an S corporation (as defined in section 1361 of that Code); a limited liability company that does not affirmatively elect to be treated as a corporation; and a joint venture or general partnership. The term “Secretary” means the Secretary of Agriculture. Subject to subsection (i), the total amount of payments received, directly or indirectly, by a person or legal entity (except a qualified pass-through entity) for any crop year under sections 1116 and 1117 of the Agricultural Act of 2014 ( 7 U.S.C. 9016 , 9017) (other than for peanuts) may not exceed $155,000. Subject to subsection (i), the total amount of payments received, directly or indirectly, by a person or legal entity (except a qualified pass-through entity) for any crop year under sections 1116 and 1117 of the Agricultural Act of 2014 ( 7 U.S.C. 9016 , 9017) for peanuts may not exceed $155,000. Nothing in this section authorizes any limitation on any benefit associated with the forfeiture of a commodity pledged as collateral for a loan made available under title I of the Agricultural Act of 2014 [ 7 U.S.C. 9001 et seq.]. In implementing subsections (b) and (c) and a program described in paragraphs (1)(C) and (2)(B) of section 1308–3a(b) 1 of this title, the Secretary shall issue such regulations as are necessary to ensure that the total amount of payments are attributed to a person by taking into account the direct and indirect ownership interests of the person in a legal entity that is eligible to receive the payments. 1 See References in Text note below. Each payment made directly to a person shall be combined with the pro rata interest of the person in payments received by a legal entity in which the person has a direct or indirect ownership interest unless the payments of the legal entity have been reduced by the pro rata share of the person. Each payment made to a legal entity shall be attributed to those persons who have a direct or indirect ownership interest in the legal entity unless the payment to the legal entity has been reduced by the pro rata share of the person. Except as provided in clause (ii), payments made to a legal entity shall not exceed the amounts specified in subsections (b) and (c). Payments made to a qualified pass-through entity shall not exceed, for each payment specified in subsections (b) and (c), the amount determined by multiplying the maximum payment amount specified in subsections (b) and (c) by the number of persons and legal entities (other than qualified pass-through entities) that comprise the ownership of the qualified pass-through entity. Payments made to a legal entity shall be reduced proportionately by an amount that represents the direct or indirect ownership in the legal entity by any person or legal entity that has otherwise exceeded the applicable maximum payment limitation. Attribution of payments made to legal entities shall be traced through 4 levels of ownership in legal entities. Any payments made to a legal entity (a first-tier legal entity) that is owned in whole or in part by a person shall be attributed to the person in an amount that represents the direct ownership in the first-tier legal entity by the person. Any payments 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 of the second-tier legal entity in the first-tier legal entity. If the second-tier legal entity is owned (in whole or in part) by a person, the amount of the payment made to the first-tier legal entity shall be attributed to the person in the amount that represents the indirect ownership in the first-tier legal entity by the person. Except as provided in clause (ii), the Secretary shall attribute payments at the third and fourth tiers of ownership in the same manner as specified in subparagraph (C). If the fourth-tier of ownership is that of a fourth-tier legal entity and not that of a person, the Secretary shall reduce the amount of the payment to be made to the first-tier legal entity in the amount that represents the indirect ownership in the first-tier legal entity by the fourth-tier legal entity. Except as provided in subparagraph (B), payments received by a child under the age of 18 shall be attributed to the parents of the child. The Secretary shall issue regulations specifying the conditions under which payments received by a child under the age of 18 will not be attributed to the parents of the child. Subsections (b) and (c) shall not apply to a cooperative association of producers with respect to commodities produced by the members of the association that are marketed by the association on behalf of the members of the association but shall apply to the producers as persons. With respect to irrevocable trusts and estates, the Secretary shall administer this section through section 1308–5 of this title in such manner as the Secretary determines will ensure the fair and equitable treatment of the beneficiaries of the trusts and estates. allow for modification or termination of the trust by the grantor; allow for the grantor to have any future, contingent, or remainder interest in the corpus of the trust; or except as provided in clause (ii), provide for the transfer of the corpus of the trust to the remainder beneficiary in less than 20 years beginning on the date the trust is established. contingent on the remainder beneficiary achieving at least the age of majority; or contingent on the death of the grantor or income beneficiary. For the purposes of this section through section 1308–5 of this title , a revocable trust shall be considered to be the same person as the grantor of the trust. for cash; or for a crop share guaranteed as to the amount of the commodity to be paid in rent. A cash rent tenant who makes a significant contribution of active personal management, but not of personal labor, with respect to a farming operation shall be eligible to receive a payment described in subsection (b) or (c) only if the tenant makes a significant contribution of equipment to the farming operation. Notwithstanding subsection (d), a Federal agency shall not be eligible to receive any payment, benefit, or loan under title I of the Food, Conservation, and Energy Act of 2008 [ 7 U.S.C. 8701 et seq.], title I of the Agricultural Act of 2014 [ 7 U.S.C. 9001 et seq.], or title XII of this Act [ 16 U.S.C. 3801 et seq.]. A lessee of land owned by a Federal agency may receive a payment described in subsection (b), (c), or (d) if the lessee otherwise meets all applicable criteria. Notwithstanding subsection (d), except as provided in subsection (g), a State or local government, or political subdivision or agency of the government, shall not be eligible to receive any payment, benefit, or loan under title I of the Food, Conservation, and Energy Act of 2008 [ 7 U.S.C. 8701 et seq.], title I of the Agricultural Act of 2014 [ 7 U.S.C. 9001 et seq.], or title XII of this Act [ 16 U.S.C. 3801 et seq.]. A lessee of land owned by a State or local government, or political subdivision or agency of the government, may receive payments described in subsections (b), (c), and (d) if the lessee otherwise meets all applicable criteria. In the administration of this section through section 1308–5 of this title , the Secretary may not approve any change in a farming operation that otherwise will increase the number of persons to which 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 section 1308–1 of this title shall be considered a bona fide and substantive change in the farming operation. If any ownership interest in land or a commodity is transferred as the result of the death of a program participant, the new owner of the land or commodity may, if the person is otherwise eligible to participate in the applicable program, succeed to the contract of the prior owner and receive payments subject to this section without regard to the amount of payments received by the new owner. Payments made under this paragraph shall not exceed the amount to which the previous owner was entitled to receive under the terms of the contract at the time of the death of the prior owner. The Secretary shall apply any order described in section 1614(d)(1) of the Agricultural Act of 2014 ( 7 U.S.C. 9097(d)(1) ) to payments under sections 1116 and 1117 of that Act ( 7 U.S.C. 9016 , 9017) prior to applying payment limitations under this section. Notwithstanding subsection (f)(6)(A), a State or local government, or political subdivision or agency of the government, shall be eligible, subject to the limitation in paragraph (2), to receive a payment described in subsection (b) or (c) for land owned by the State or local government, or political subdivision or agency of the government, that is used to maintain a public school. For each State, the total amount of payments described in subsections (b) and (c) that are received collectively by the State and local government and all political subdivisions or agencies of those governments shall not exceed $500,000. The limitation in subparagraph (A) shall not apply to States with a population of less than 1,500,000. Regulations of the Secretary shall establish time limits for the various steps involved with notice, hearing, decision, and the appeals procedure in order to ensure expeditious handling and settlement of payment limitation disputes. Notwithstanding any other provision of law, actions taken by an individual or other entity in good faith on action or advice of an authorized representative of the Secretary may be accepted as meeting the requirement under this section or section 1308–1 of this title , to the extent the Secretary deems it desirable in order to provide fair and equitable treatment. For the 2025 crop year and each crop year thereafter, the Secretary shall annually adjust the amounts described in subsections (b) and (c) for inflation based on the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor. The Secretary of Agriculture shall implement a payment provisions education program for appropriate personnel of the Department of Agriculture and members and other personnel of local, county, and State committees established under section 8(b) of the Soil Conservation and Domestic Allotment Act ( 16 U.S.C. 590h(b) ), for the purpose of fostering more effective and uniform application of the payment limitations and restrictions under sections 1001 through 1001C of the Food Security Act of 1985 [sections 1808 to 1308–3 of this title]. The education program shall provide training to such personnel in the fair, accurate, and uniform application to individual farming operations of the provisions of law and regulation relating to the payment provisions of sections 1001 through 1001C of the Food Security Act of 1985. Particular emphasis shall be given to the changes in the law made by sections 1301, 1302, and 1303 of this Act [enacting section 1308–1 of this title , amending this section, and enacting provisions set out as notes under this section and section 1308–1 of this title ]. The education program shall be fully implemented, and the training completed, not later than 30 days after the date final regulations are issued to carry out the amendments made by this subtitle [enacting sections 1308–1 to 1308–3 of this title and amending this section and section 1308–1 of this title ]. The Secretary shall carry out the program provided under this subsection through the Commodity Credit Corporation.” proposed regulations to carry out the amendments made by this subtitle [enacting sections 1308–1 to 1308–3 of this title and amending this section and section 1308–1 of this title ] not later than April 1, 1988 ; and final regulations to carry out such amendments not later than August 1, 1988 . Any field instructions relating to, or other supplemental clarifications of, the regulations issued under sections 1001 through 1001C of the Food Security Act of 1985 [sections 1308 to 1308–3 of this title] shall not be used in resolving issues involved in the application of the payment limitations or restrictions under such sections or regulations to individuals, other entities, or farming operations until copies of the publication are made available to the public. To allow for the equitable reorganization of farming operations to conform to the limitations and restrictions contained in the amendments made to the Food Security Act of 1985 by this subtitle [enacting sections 1308–1 to 1308–3 of this title and amending this section and section 1308–1 of this title ] in cases in which the application of such limitations and restrictions will reduce payments to the farming operation (as determined by the Secretary), the Secretary may waive the application of the substantive change rule under section 1001(5)(E) [ section 1308(5)(E) of this title ], as added by section 1303 of this Act, or any regulation of the Secretary containing a comparable rule, to any reorganization applied for prior to the final date when producers are eligible to enter into contracts to participate in the commodity programs established for the 1989 crop year, to the extent the Secretary determines appropriate to facilitate any such equitable reorganizations that does not increase such payments.” The Secretary of Agriculture shall review the regulations in effect on the date of enactment of this Act [ Oct. 18, 1986 ] that define ‘person’ under section 1001 of the Food Security Act of 1985 [this section] and related regulations in effect on such date otherwise affecting the payment limitations under such section, to determine ways in which such regulations can be revised to better ensure the fair and reasonable application of limitations and eliminate fraud and abuse in the application of such payment limitations. The Secretary also shall review the amendments to section 1001 of the Food Security Act of 1985 made by this section. with respect to the matters reviewed under paragraph (1)(A), proposed regulations or amendments to regulations, to take effect not earlier than October 1, 1987 , that will meet the object with respect to limitations specified in paragraph (1)(A); and with respect to the matters reviewed under paragraph (1)(B), recommendations on legislative changes to section 1001 of the Food Security Act of 1985 that the Secretary determines are necessary or appropriate.”