[Code of Federal Regulations] [Title 7, Volume 10] [Revised as of January 1, 2007] From the U.S. Government Printing Office via GPO Access [CITE: 7CFR1400.3] [Page 325-330] TITLE 7--AGRICULTURE CHAPTER XIV--COMMODITY CREDIT CORPORATION, DEPARTMENT OF AGRICULTURE PART 1400_PAYMENT LIMITATION AND PAYMENT ELIGIBILITY--Table of Contents Subpart A_General Provisions Sec. 1400.3 Definitions. (a) The terms defined in part 718 of this chapter shall be applicable to this part and all documents issued in accordance with this part, except as otherwise provided in this section. (b) The following definitions shall also be applicable to this part: Active personal labor. Active personal labor is personally providing physical activities necessary in a farming operation, including activities involved in land preparation, planting, cultivating, harvesting, and marketing of agricultural commodities in the farming operation. Other physical activities include those physical activities required to establish and maintain conserving cover crops on conserving use and CRP acreages and those physical activities necessary in livestock operations. Active personal management. Active personal management is personally providing: (1) The general supervision and direction of activities and labor involved in the farming operation; or (2) Services (whether performed on-site or off-site) reasonably related and necessary to the farming operation, including: (i) Supervision of activities necessary in the farming operation, including activities involved in land preparation, planting, cultivating, harvesting, and marketing of agricultural commodities, as well as activities required to establish and maintain conserving cover crops on conserving use and CRP acreage and activities required in livestock operations; (ii) Business-related actions, which include discretionary decision making; (iii) Evaluation of the financial condition and needs of the farming operation; (iv) Assistance in the structuring or preparation of financial reports or analyses for the farming operation; (v) Consultations in or structuring of business-related financing arrangements for the farming operation; (vi) Marketing and promotion of agricultural commodities produced by the farming operation; (vii) Acquiring technical information used in the farming operation; and (viii) Any other management function reasonably necessary to conduct the farming operation and for which service the farming operation would ordinarily be charged a fee. Alien. Any person not a citizen or national of the United States. Lawful Alien. Any person who is not a citizen or national of the United States but who is admitted into the United States for permanent residence under the Immigration and Nationality Act and possesses a valid Alien Registration Receipt Card (Form I-551 or I-151). (2) [Reserved] Capital. Capital consists of the funding provided by an individual or entity to the farming operation in order for such operation to conduct farming activities. In determining whether an individual or entity has contributed capital, in the form of funding, to the farming operation, such capital must have been derived from a fund or account separate and distinct from that of any other individual or entity involved in such operation. Capital does not include the value of any labor or management that is contributed to the farming operation or any outlays for land or equipment. A capital contribution may be a direct out-of-pocket input of a specified sum or an amount borrowed by the individual or entity. (1) With respect to a farming operation conducted by an individual, a joint operation in which the capital is contributed by a member of the joint operation or an entity, such capital contributed to meet the requirements of: [[Page 326]] (i) Section 1400.201(b) must be contributed directly by the individual or entity and must not be acquired as a result of a loan made to, guaranteed, or secured by: (A) Any other individual, joint operation, or entity that has an interest in such farming operation; (B) Such individual, joint operation, or entity by any other individual, joint operation, or entity that has an interest in such farming operation; or (C) Any other individual, joint operation, or entity in whose farming operation such individual, joint operation, or entity has an interest; and (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by the individual or entity and if acquired as a result of a loan made to, guaranteed, or secured by the individuals, joint operations, or entities listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the loan must bear the prevailing interest rate; and (2) With respect to a farming operation conducted by a joint operation in which the capital is contributed by such joint operation, such capital contributed to meet the requirements of: (i) Section 1400.201(b) must be contributed directly by the joint operation and must not be acquired as a result of a loan made to, guaranteed, or secured by: (A) Any individual, entity, or other joint operation that has an interest in such farming operation, including either joint operation's members; (B) Such joint operation by any individual, entity, or other joint operation that has an interest in such farming operation; or (C) Any individual, entity, or other joint operation in whose farming operation such joint operation has an interest. (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by the joint operation and if acquired as a result of a loan made to, guaranteed, or secured by the individuals, entities, or joint operations listed in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, the loan must bear the prevailing interest rate. Entity. An entity is a corporation, joint stock company, association, limited partnership, limited liability partnership, limited liability company, irrevocable trust, revocable trust, estate, charitable organization, or other similar organization, including any such organization participating in the farming operation 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 organization. Equipment. Equipment is the machinery and implements needed by the farming operation to conduct activities of the farming operation, including machinery and implements involved in land preparation, planting, cultivating, harvesting, or marketing of the crops involved. Equipment also includes machinery and implements needed to establish and maintain conserving cover crops on conserving use and CRP acreages and those needed to conduct livestock operations. (1) With respect to a farming operation conducted by an individual, entity or joint operation in which the equipment is contributed by a member of the joint operation, such equipment contributed to meet the requirements of: (i) Section 1400.201(b) must be contributed directly by the individual or entity and must not be acquired as a result of a loan made to, guaranteed, or secured by: (A) Any other individual, joint operation, or entity that has an interest in such farming operation. (B) Such individual, joint operation, or entity by any other individual, joint operation, or entity that has an interest in such farming operation; or (C) Any other individual, joint operation, or entity in whose farming operation such individual, joint operation, or entity has an interest. (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by the individual or entity and if acquired as a result of a loan made to, guaranteed, or secured by the individuals, joint operations, or entities listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the loan must bear the prevailing interest rate. (2) With respect to a farming operation conducted by a joint operation in which the equipment is contributed by such joint operation, such equipment [[Page 327]] contributed to meet the requirements of: (i) Section 1400.201(b) must be contributed directly by the joint operation and must not be acquired as a result of a loan made to, guaranteed, or secured by: (A) Any individual, entity, or other joint operation that has an interest in such farming operation, including either joint operation's members. (B) Such joint operation by any individual, entity, or other joint operation that has an interest in such farming operation; or (C) Any individual, entity, or other joint operation in whose farming operation such joint operation has an interest; and (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by the joint operation and if listed as a result of a loan made to, guaranteed, or secured by the individuals, entities, or joint operations provided in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, the loan must bear the prevailing interest rate. (3) Such equipment may be leased from any source. If such equipment is leased from another individual or entity with an interest in the farming operation, such equipment must be leased at a fair market value. Family member. The term family member means an individual to whom another member in the farming operation is related as lineal ancestor, lineal descendant, or sibling, including spouses of those individuals who do not make a significant contribution to the farming operation themselves. Farming operation. A farming operation is a business enterprise engaged in the production of agricultural products that is operated by an individual, entity, or joint operation and is eligible to receive payments, directly or indirectly, under one or more of the programs specified in Sec. 1400.1. An entity or individual may have more than one farming operation if such individual or entity is a member of one or more joint operations. Indian tribe means any Indian tribe, band, nation, pueblo, or other organized group or community, including any Alaska Native village or regional corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. Interest in a Farming Operation. An individual, entity or joint operation has an interest in a farming operation if the individual, entity or joint operation: (1) Owns or rents the land; (2) Has an interest in the agricultural commodities produced; or (3) Is a member of a joint operation that either owns or rents the land or has an interest in the agricultural commodities produced. Irrevocable trust. All trusts shall be considered to be revocable trusts, except a trust may be considered to be an irrevocable trust if it is a trust: (1) That may not be modified or terminated by the grantor; (2) In the corpus of which the grantor does not have any future, contingent or remainder interest; and (3) If established after January 1, 1987, that does not provide for the transfer of the corpus of the trust to the remainder beneficiary in less than 20 years from the date the trust is established except in cases where the transfer is contingent upon either the remainder beneficiary achieving at least the age of majority or the death of the grantor or income beneficiary. Joint operation. A joint operation is a general partnership, joint venture, or other similar business organization. Land. Land is farmland that meets the specific requirements of the applicable program. (1) With respect to a farming operation conducted by an individual, a joint operation in which the land is contributed by a member of the joint operation, or an entity, such land contributed to meet the requirements of: (i) Section 1400.201(b) must be contributed directly by the individual or entity and must not be acquired as a result of a loan made to, guaranteed, or secured by: (A) Any other individual, joint operation, or entity that has an interest in such farming operation; (B) Such individual, joint operation, or entity by any other individual, joint [[Page 328]] operation, or entity that has an interest in such farming operation; or (C) Any other individual, joint operation, or entity in whose farming operation such individual, joint operation, or entity has an interest; and (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by the individual or entity and if acquired as a result of a loan made to, guaranteed, or secured by the individuals, joint operations, or entities listed in paragraphs (1)(i)(A) through (1)(i)(C) of this definition, the loan must bear the prevailing interest rate; and (2) With respect to a farming operation conducted by a joint operation in which the land is contributed by such joint operation, such land contributed to meet the requirements of: (i) Section 1400.201(b) must be contributed directly by the joint operation and must not be acquired as a result of a loan made to, guaranteed, or secured by: (A) Any individual, entity, or other joint operation that has an interest in such farming operation, including either joint operation's members; (B) Such joint operation by any individual, entity, or other joint operation that has an interest in such farming operation; or (C) Any individual, entity, or other joint operation in whose farming operation such joint operation has an interest; and (ii) Sections 1400.6 and 1400.201(d) must be contributed directly by the joint operation and if acquired as a result of a loan made to, guaranteed, or secured by the individuals, entities, or joint operations provided in paragraphs (2)(i)(A) through (2)(i)(C) of this definition, the loan must bear the prevailing interest rate. (3) Such land may be leased from any source. If such land is leased from another individual or entity with an interest in the farming operation, such land must be leased at a fair market value. Loan commodity means wheat, corn, grain sorghum, barley, oats, upland cotton, extra long staple cotton, rice, soybeans, other oilseeds, dry peas, lentil, small chickpeas, wool, mohair, peanuts and honey. Payment means: (1) Payments made in accordance with part 1412 of this chapter; (2) Loan gains and loan deficiency payments made in accordance with parts 1421 and 1427 of this chapter; (3) CRP annual rental payments made in accordance with part 1410 of this chapter; (4) Non-Insured Crop Disaster Assistance Program (NAP) payments made in accordance with part 1437 of this chapter; and (5) For other programs, any payments designated in individual program regulations or elsewhere in this part. Permitted entity. A permitted entity is an entity designated annually by an individual that is to receive a payment, loan, or benefit under a program specified in Sec. 1400.1(a). Person. (1) A person is: (i) An individual, including any individual participating in a farming operation as a partner in a general partnership, a participant in a joint venture, or a participant in a similar entity; (ii) A corporation, joint stock company, association, limited partnership, limited liability partnership, limited liability company, irrevocable trust, revocable trust combined with the grantor of the trust, estate, or charitable organization, including any such entity or organization participating in the farming operation 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; and (iii) A State, political subdivision, or agency thereof. (2) In order for an individual or entity, other than an individual or entity that is a member of a joint operation, to be considered a separate person for the purposes of this part, in addition to other provisions of this part, the individual or entity must: (i) Have a separate and distinct interest in the land or the crop involved; (ii) Exercise separate responsibility for such interest; and (iii) Maintain funds or accounts separate from that of any other individual or entity for such interest. (3) With respect to an individual or entity that is a member of a joint operation, such individual or entity will [[Page 329]] have met the requirements of paragraph (2) of this definition if the joint operation meets the requirements of such paragraph. (4) Any cooperative association of producers that markets commodities for producers shall not be considered a person with respect to the commodities so marketed for producers. Public school. A public school is a primary, elementary, secondary school, college, or university that is directly administered under the authority of a governmental body or that receives a predominant amount of its financing from public funds. Sharecropper. An individual who performs work in connection with the production of the crop under the supervision of the operator and who receives a share of such crop in return for the provision of such labor. Significant contribution. A significant contribution is the provision of the following to a farming operation by an individual or entity: (1)(i) With respect to land, capital, or equipment contributed by an individual or entity, a contribution that has a value at least equal to 50 percent of the individual's or entity's commensurate share of: (A) The total value of the capital necessary to conduct the farming operation; (B) The total rental value of the land necessary to conduct the farming operation; (C) The total rental value of the equipment necessary to conduct the farming operation; or (ii) If the contribution by an individual or entity consists of any combination of land, capital, and equipment, such combined contribution must have a value at least equal to 30 percent of the individual's or entity's commensurate share of the total value of the farming operation; (2) With respect to active personal labor, an amount which is the smaller of: (i) 1,000 hours per calendar year; or (ii) 50 percent of the total hours that would be necessary to conduct a farming operation that is comparable in size to such individual's or entity's commensurate share in the farming operation; (3) With respect to active personal management, activities that are critical to the profitability of the farming operation, taking into consideration the individual's or entity's commensurate share in the farming operation; and (4) With respect to a combination of active personal labor and active personal management, when neither contribution individually meets the requirements of paragraphs (2) and (3) of this definition, a combination of active personal labor and active personal management that, when viewed together, results in a critical impact on the profitability of the farming operation in an amount at least equal to either the significant contribution of active personal labor or active personal management as provided in paragraphs (2) and (3) of this definition. Substantial amount of active personal labor. Substantial amount of active personal labor means the provision of active personal labor in an amount that is the smaller of: (1) 1,000 hours per calendar year; or (2) 50 percent of the total hours that would be necessary to conduct a farming operation that is comparable in size to such individual's or entity's commensurate share in the farming operation. Substantial beneficial interest. A substantial beneficial interest in an entity is an interest of 10 percent or more. In determining whether such an interest equals at least 10 percent, all interests in the entity that are owned by an individual or entity directly or indirectly through such means as ownership of a corporation that owns the entity shall be taken into consideration. In order to ensure that the provisions of this part are not circumvented by an individual or entity, the Deputy Administrator may determine that an ownership interest requirement of less than 10 percent shall be applied to such individual or entity. Total value of the farming operation. The total value of the farming operation is the total of the costs, excluding the value of active personal labor and active personal management contributed by a person who is a member of the farming operation, needed to carry out the farming operation for the [[Page 330]] year for which the determination is made. [61 FR 37566, July 18, 1996, as amended at 67 FR 61470, Oct. 1, 2002; 71 FR 66433, Nov. 15, 2006]