Grassley was to offer the amendment before the holiday recess but due to partisan maneuvers, he was blocked from doing so. Grassley is looking forward to offering his amendment when debate resumes on the senate floor.
During December debate on the farm bill, senators approved three Grassley amendments. Two Grassley amendments passed during the December debate address concentration within the livestock industry. One of these amendments adopted will make it unlawful for a packer to own, feed or control livestock intended for slaughter. The final Grassley amendment adopted during the December debate amends the Packers and Stockyards Act to prohibit mandatory arbitration clauses from being included in contracts between livestock producers and packers.
A Grassley amendment to help livestock producers develop methane-recovery manure management systems by guaranteeing federal funding for the purchase of anaerobic digesters was included in the managers' amendment of the farm bill.
For a copy of the legislative language of the Payment Limitations amendment, please contact Grassley's office, 202/224-3744. A summary follows here.
Limitations on Payments:
Direct and Counter Cyclical Payments
The amendment will reduce the direct and counter cyclical limit to $75,000
Market Gains, Loan Deficiency Payments, Certificates and Forfeiture Gains
The amendment will allow for a limitation on marketing loan benefits at $150,000. In addition, gains due to use of commodity certificates and forfeiture of grain to the Commodity Credit Corporation will be counted against the limitation.
Certificate Authority Value Limited
Generic certificates will have little value because loans issued beyond loan gain limitations will essentially become recourse loans.
Direct Attribution of Payments
Limitations will be tracked through individuals, entities, partnerships, etc. directly to individuals. While producers may continue to participate in operations that exist today, direct attribution eliminates the interest in participating in multiple entities for payment limitation purposes.
Those who qualify for husband and wife rules will have a maximum combined limitation for direct, counter-cyclical and marketing loan benefits at $275,000 ($50,000 over the combined total of both limits for an individual).
Gross Income Test
An owner or producer shall not be eligible for a payment or loan for a fiscal or crop year, as applicable, if (1) the average adjusted gross income (as defined in section 32 of the Internal Revenue Code of 1986) of the owner or operator for the previous 3 taxable years, as determined by taking into account only items of income gain, deduction, or loss attributable to a farming business (as defined in section 263A(e)(4) of the Code), exceeds $2,500,000; and (2) less than 75 percent of the adjusted gross income for the applicable taxable year (described in paragraph (2)) is derived from the production or marketing of agricultural commodities on a farm or ranch.
Tighter Controls and Effective Enforcement:
Labor Requirements for Cash or Share Rent Tenants
Labor will be established as an additional requirement for cash and share rent tenants. Tenants will be required to provide the lesser of 40% or 1000 hours necessary to conduct their commensurate share of the farming operation.
Active Personal Management Defined
Active personal management is to be defined as "providing management on a regular, substantial, and continuous basis to include direct supervision and direction of activities for on site services and labor.
Landowner Exemption to Actively Engaged Rules Tightened
Landowners who are leasing owned land to another producer through a share rental agreement with payments commensurate to their risk in the crop produced will remain exempt. For all other situations, landowners must provide active personal management.
Enforcement of the Rules
OIG will conduct in-depth reviews in five counties in six states on a yearly basis. If significant problems are identified in a state, the Secretary will initiate a training program regarding the payment limitation requirements for FSA employees in the state.
Within 180 days after enactment of the Farm Bill, the Secretary will report to Congress to describe: 1) Training of employees; 2) procedures used to identify potential violations; 3) Requirements for employees to report violations; and 4) sanctions against employees who fail to report or investigate potential violations.