Rule2026-11002
Payment Limitation and Payment Eligibility
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 2, 2026
Effective
June 2, 2026
Issuing agencies
Agriculture DepartmentCommodity Credit Corporation
Abstract
This rule revises the payment limitation and payment eligibility regulations to conform with provisions of the One Big Beautiful Bill Act (OBBBA). This rule also makes additional changes to those regulations to improve program administration and clarify and update existing provisions.
Full Text
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<title>Federal Register, Volume 91 Issue 105 (Tuesday, June 2, 2026)</title>
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[Federal Register Volume 91, Number 105 (Tuesday, June 2, 2026)]
[Rules and Regulations]
[Pages 32880-32887]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-11002]
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DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
7 CFR Part 1400
[Docket ID FSA-2026-0100]
RIN 0560-AI86
Payment Limitation and Payment Eligibility
AGENCY: Commodity Credit Corporation, U.S. Department of Agriculture
(USDA).
ACTION: Final rule.
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SUMMARY: This rule revises the payment limitation and payment
eligibility regulations to conform with provisions of the One Big
Beautiful Bill Act (OBBBA). This rule also makes additional changes to
those regulations to improve program administration and clarify and
update existing provisions.
DATES: This rule is effective on June 2, 2026.
FOR FURTHER INFORMATION CONTACT: Rebecca Csutoras; telephone: (717)
893-0963; or email: <a href="/cdn-cgi/l/email-protection#bceed9ded9dfdfdd92ffcfc9c8d3ceddcffcc9cfd8dd92dbd3ca"><span class="__cf_email__" data-cfemail="4a182f282f29292b6409393f3e25382b390a3f392e2b642d253c">[email protected]</span></a>. Individuals with
disabilities who require alternative means for communication should
contact the USDA Target Center at (202) 720-2600 (voice and text
telephone (TTY mode)) or dial 711 for Telecommunications Relay Service
(both voice and text telephone users can initiate this call from any
telephone).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Qualified Pass-Through Entities
A. Payment Limitation
B. Payment Eligibility
C. Certification of Average AGI
D. Implementation
III. Exception to the Average AGI Limitation
IV. Other Changes
V. Severability
VI. Regulatory Analyses
A. Effective Date, Notice and Comment, and Paperwork Reduction
Act
B. Executive Orders 12866, 13563, and 14192
C. Cost Benefit Analysis Summary
D. Environmental Review
E. Executive Order 13175
F. Unfunded Mandates Reform Act
G. E-Government Act Compliance
I. Background
On July 4, 2025, President Trump signed into law H.R. 1 (Pub. L.
119-21), also known as the One Big Beautiful Bill Act (OBBBA). This
rule amends 7 CFR part 1400 to implement payment limitation changes
made by OBBBA regarding equitable treatment of certain entities and an
exception to the average adjusted gross income (AGI) limitation for
certain programs. In addition to the payment limitation changes
addressed in this rule, OBBBA increased the payment limitations for the
Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs
and mandated annual increases to those limits based on the Consumer
Price Index for All Urban Consumers. Those changes were implemented
through a final rule published on January 12, 2026 (91 FR 1043). This
rule also makes discretionary changes to the payment limitation and
payment eligibility regulations to improve program administration and
clarify and update existing provisions.
II. Qualified Pass-Through Entities
Section 10306 of OBBBA amended Section 1001 of the Food Security
Act of 1985 (7 U.S.C. 1308) to provide equitable treatment of certain
entities under the provisions for payment limitations. Payment
limitations are the maximum amount that a person or legal entity can
receive for any crop year, directly or indirectly, under certain CCC,
FSA, and NRCS programs, and payments to legal entities are tracked
(``attributed'') through four levels of ownership (7 U.S.C.
1308(e)(3)). Attribution of payments through four levels of ownership
of legal entities is applied according to 7 U.S.C. 1308(e) and 7 CFR
1400.105. When a legal entity is a payment applicant, then the entity
itself (the ``payment entity'') is attributed the full payment amount
and all owners in the first three member levels are attributed an
amount equal to their indirect ownership share in the payment entity.
In this way, payments are limited to eligible participants comprising
the payment entity and owners through the fourth level of ownership.
Owners at the member level may be persons or other legal entities,
including qualified pass-through entities.
Prior to the changes discussed below, only joint ventures and
general partnerships (``joint operations'') were allowed to receive
payments up to the amount determined by multiplying the applicable
payment limitation for a
[[Page 32881]]
program by the number of persons or legal entities that comprise the
ownership of that joint venture or general partnership. Other types of
legal entities were allowed to receive payments up to the amount of a
single payment limitation, regardless of the number of persons or legal
entities that comprised the ownership.
Section 10306(a)(1)(B) of OBBBA, which amends section 1001(a) of
the Food Security Act of 1985, added the new defined term ``Qualified
pass-through entity.'' Section 10306(b) of OBBBA also amended
requirements relating to the attribution of payments by removing
references to ``Joint Ventures and General Partnerships'' and replacing
it with the newly defined term ``Qualified pass-through entity.'' (7
U.S.C. 1308(e)(3)(B)(ii)). Qualified pass-through entities, as amended
by and defined under OBBBA, include joint ventures and general
partnerships. However, the term also includes: (A) 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.]); (B) an S corporation (as
defined in section 1361 of that Code); and (C) a limited liability
company that does not affirmatively elect to be treated as a
corporation. Sections 10306 and 10307 of OBBBA then updated the
language regarding requirements for attribution of payments and payment
limitations to include ``Qualified-pass through entities.'' Thus, the
interpretation that previously applied only to joint ventures and
general partnerships now applies to qualified pass-through entities as
amended and defined by OBBBA.
In alignment with OBBBA, this rule defines ``qualified pass-through
entity'' in Sec. 1400.3 to mean:
(1) 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.).
Partnership is defined in 26 U.S.C. 761 to include a syndicate, group,
pool, joint venture, or other unincorporated organization through or by
means of which any business, financial operation, or venture is carried
on, and which is not, a corporation or a trust or estate. In simplified
terms, this means a business entity with two or more members that is
recognized as a separate entity for federal tax purposes and is not
classified as a corporation, trust, or estate under the Internal
Revenue Code;
(2) An S corporation as defined in 26 U.S.C. 1361(a);
(3) A limited liability company (LLC) that does not affirmatively
elect to be treated as a corporation for federal tax purposes; and
(4) A joint venture or general partnership.
This rule amends the payment limitation provisions of subpart B and
the payment eligibility provisions of subpart C as described below.
This rule also updates references that apply to joint operations
throughout part 1400 to specify that those references are now
applicable to qualified pass-through entities. For example, CCC is
updating the definitions of ``attribution'' and ``farming operation''
to replace references to ``joint operations'' with ``qualified pass-
through entities'' to align with OBBBA.
A. Payment Limitation
As required by Section 10307 of OBBBA (7 U.S.C. 1308), maximum
payment limitation amounts for qualified pass-through entities will be
determined in a manner consistent with the limitation applied to joint
ventures and general partnerships prior to this rule. Specifically, a
qualified pass-through entity's maximum payment limitation will be
equal to the applicable announced payment limitation times the number
of persons or entities, other than qualified pass-through entities,
that comprise the ownership of the qualified pass-through entity (7
U.S.C. 1308(e)(3)(B)(ii)).
For example, if the program payment limitation is $125,000 and an S
corporation has two individual owners (shareholders), the program
payment limitation is multiplied by two, resulting in a maximum payment
limitation for the S corporation of $250,000. Prior to the change
required by OBBBA, the S corporation would have been capped at one
maximum payment limitation, which was $125,000. To illustrate further,
if a qualified pass-through entity, such as an LLC that has not
affirmatively elected to be taxed as a corporation, has two general
partnership owners (partners) and each general partnership has two
individual owners (partners), the embedded general partnerships are
bypassed and the maximum payment limitation for the LLC will be
multiplied by four, resulting in a maximum payment limitation of
$500,000. Prior to this change, the LLC would have been subject to one
payment limitation of $125,000.
Accordingly, this final rule amends Sec. 1400.106(b) to implement
this change to the payment limitation calculation for all qualified
pass-through entities beginning with program year 2026.
B. Payment Eligibility
To be eligible for payments, a person or legal entity shall be
``actively engaged in farming'' (7 U.S.C. 1308-1(b)(2)). This
requirement is currently implemented in USDA regulations at 7 CFR part
1400, subpart C.
Section 10306(c)(1) of OBBBA extended this requirement to a
qualified pass-through entity. A qualified pass-through entity shall be
considered as ``actively engaged in farming'' if it separately makes a
significant contribution (based on the total value of the farming
operation) of capital, equipment and land, the stockholders or members
collectively make a significant contribution of personal labor or
active personal management to the operation, the share of the profits
or losses from the farming operation is commensurate with the
contributions to the farming operation and the contributions are at
risk (7 U.S.C. 1308-1(b)(2)). Section 10306(c)(2) of OBBBA also
provides that the partners or members of the qualified pass-through
entity who make a significant contribution of personal labor or active
personal management shall be considered actively engaged in farming if
the qualified pass-through entity ``separately makes a significant
contribution (based on the total value of the farming operation
involved) of capital, equipment, or land'' and the contribution is
determined commensurate and at risk.
Accordingly, this rule amends the ``actively engaged in farming''
provisions to provide consistent requirements for all qualified pass-
through entities. To be determined ``actively engaged in farming,''
members of qualified pass-through entities will be required to meet
applicable payment eligibility requirements including contributions of
capital, equipment, land, active personal labor, and active personal
management as provided in this rule (Sec. 1400.203). To meet this
requirement, contributions must be significant, commensurate with the
members' share of the farming operation, and must be at risk of loss.
The definition of a ``contribution'' refers to the provision of
capital, equipment, land, active personal labor, or active personal
management made with the expectation of receiving a benefit that
depends solely on the success of the farming operation. This rule
updates Sec. Sec. 1400.201 and 1400.203 to allow members of qualified
pass-through entities to include compensated labor or management
contributions towards meeting the actively engaged in farming
requirement. Previously, contributions associated with guaranteed
payments, such as salaries, were not credited when determining whether
a member is actively engaged in farming. This update provides
consistent treatment of
[[Page 32882]]
member contributions across all entity types.
C. Certification of Average AGI
Certification of compliance with the average AGI limitations
applies to a person or legal entity. (7 U.S.C. 1308-3a(c)).
Historically, joint operations do not certify compliance at the entity
level due to the pass-through nature of income for those entities.
Instead, the certification requirement for joint operations was met by
requiring certification at the member level.
When Section 10306(a)(1)(B) of OBBBA added the new term ``Qualified
pass-through entity,'' it included ``a joint venture or general
partnership'' in the meaning of the term. Consistent with the
historical interpretation discussed above, for program year 2026 and
subsequent years, qualified pass-through entities are not required to
certify compliance with the average AGI limitation at the entity level
(Sec. 1400.502(a)). Members, through the fourth level of ownership,
other than qualified pass-through entities embedded in the ownership
structure of other legal entities, remain required to certify
compliance. For example, if an S corporation has two individual owners,
only the two individual owners must certify compliance. Prior to this
change, the S corporation was required to certify compliance at the
entity level in addition to the two individual members. To illustrate
further, if a qualified pass-through entity Limited Liability Company
(LLC) has two general partnership owners and each general partnership
has two individual owners, the four individual owners at the third
level of ownership must certify compliance (but not the two general
partnerships). Prior to this change, the LLC and the four individual
owners were required to certify compliance, and the two general
partnerships were exempt (as is the case under OBBBA).
D. Implementation
The changes for qualified pass-through entities will be effective
beginning with the 2026 program year. For the purpose of administering
the direct attribution provisions of Sec. 1400.105, the applicable
date for determining ownership interest for qualified pass-through
entities for the 2026 program year will be September 15, 2026.
OBBBA was passed on July 4, 2025, and funding for some 2025 and
prior year programs has been expended. Applying this change
retroactively to 2025 or earlier program years would result in an added
administrative and participant burden and inconsistency between
programs. Current program participants that are LLCs or corporations
must file updated farm operating plans with FSA for program year 2026,
or later, to declare their operation type as one of the existing types
or one of the new qualified pass-through entity types (Sec. 1400.100).
The updated certifications will be effective for the program year for
which the certification is made and subsequent program years and will
not be retroactive. To implement this change, CCC is defining ``program
year'' to mean the program year as defined by the applicable program.
For the purpose of implementing payment limitation and payment
eligibility absent a specific program requirement, the program year
aligns with the fiscal year.
III. Exception to the Average AGI Limitation
In general, as discussed above, a person or legal entity is not
eligible to receive, directly or indirectly, certain program payments
or benefits described in Sec. 1400.1 if the average AGI of the person
or legal entity exceeds $900,000 for the 3 taxable years preceding the
most immediately preceding complete taxable year. Section 10308 of
OBBBA (7 U.S.C. 1308-3a(b)) creates an exception to this limitation for
an ``excepted payment or benefit,'' which includes payments or benefits
for:
<bullet> Emergency Assistance for Livestock, Honeybees, and Farm-
Raised Fish Program (ELAP),
<bullet> Livestock Forage Assistance Program (LFP),
<bullet> Livestock Indemnity Program (LIP),
<bullet> Tree Assistance Program (TAP),
<bullet> Noninsurable Crop Disaster Assistance Program (NAP), and
<bullet> Conservation benefits under Title II of the Agricultural
Improvement Act of 2018, Title II of the Agricultural Act of 2014,
Title II of the Farm Security and Rural Investment Act of 2002, Title
II of the Food, Conservation, and Energy Act of 2008, or Title XII of
the Food Security Act of 1985 received on, or after, October 1, 2024.
The exception can be requested by participants who provide an
acceptable certification, discussed below, that at least 75 percent of
the participants' average gross income was derived from farming,
ranching, or silviculture activities. For both the average AGI and the
average gross income calculations, participants must use income as
reported to the Internal Revenue Service (IRS), or as would have been
reported had a Federal tax return been required, for the 3 taxable
years preceding the most immediately preceding complete taxable year.
For example, to certify for 2026, a participant would use information
from tax years 2022, 2023, and 2024. Acceptable certifications must be
accompanied by a verification statement signed by a licensed certified
public accountant (CPA) duly qualified to practice as a CPA in any
state, territory, or possession of the United States, including a
Commonwealth, or the District of Columbia; an attorney who is a member
in good standing of the bar of the highest court of any state,
territory, or possession of the United States, including a Commonwealth
or the District of Columbia; or an individual who has been authorized
to practice before the IRS in accordance with 31 CFR part 10.
Individuals enrolled as agents pursuant to 31 CFR part 10 (enrolled
agents), who are not currently under suspension or disbarment from
practice before the IRS may practice before the IRS. . CCC is adding
enrolled agents as an acceptable third-party to complete certifications
of income from farming, ranching, or silviculture activities to improve
participant ability to provide required certifications. However, for
individual taxpayers filing joint tax returns, Congress limited such
certifications to an attorney or CPA (7 U.S.C. 1308-3a(a)(3); Sec.
1400.501(a)(2)). Accordingly, certifications of average AGI for joint
tax return filers specifying the manner in which their income would
have been declared and reported if they had filed two separate returns
continue to be accepted from only a CPA or attorney. This rule amends
Sec. 1400.504 to include the exception and provide the requirements
for the certification.
To implement this change, CCC is defining ``income derived from
farming, ranching, or silviculture activities'' in Sec. 1400.3. This
definition includes the sources of income previously included in the
definition of ``income derived from farming, ranching, or forestry
operations'' used in recent programs, and adds agritourism and direct-
to-consumer marketing of agricultural products to align with OBBBA. The
term ``income derived from farming, ranching, or forestry operations''
has been used in recent ad hoc disaster assistance programs for the
purpose of determining whether an applicant is eligible for an
increased payment limitation. For example, see the Supplemental
Disaster Relief Program regulation at 7 CFR 760.2202, and the Emergency
Livestock Relief Program 2023 and 2024 regulation at Sec. 760.2002.
The definition no longer includes the previous limitation on inclusion
of income from the sale of equipment used for agricultural purposes;
therefore, a
[[Page 32883]]
participant is not required to realize at least 66.66 percent of their
income from other listed sources before being able to include income
from the sale of agricultural equipment. This change is made to more
closely align FSA determinations of income with current IRS
requirements and to remove the burden on participants resulting from
the inequity in the classification of this income. CCC is also adding
income from the trade of equipment to the definition, as trading used
equipment when purchasing new equipment is a common business practice.
IV. Other Changes
In addition to the changes described above, this rule makes the
following discretionary changes:
<bullet> Allows State Executive Directors to designate review teams
within their respective State to ensure the 60-day timeline is met for
initial payment eligibility determinations for qualified pass-through
entities with 6 or more members (Sec. 1400.2(g));
<bullet> Establishes June 1 as the date by which foreign person
status is determined for the program year (Sec. 1400.401(b)(2)); and
<bullet> Amends the notification of interest requirements to
clarify that legal entities and joint operations must provide the name,
address, and ownership share of all interest holders in the legal
entity, regardless of ownership level (Sec. 1400.10(e)).
V. Severability
The modifications to the payment limitation and eligibility
provisions authorized by OBBBA are distinct and severable from one
another, as well as from the minor administrative changes and updates
to the payment limitation and eligibility regulations. Each provision
is designed to function independently, ensuring that the rule as a
whole remains effective and aligned with the agency's intent, even if
certain provisions were to be invalidated.
VI. Regulatory Analyses
A. Effective Date, Notice and Comment, and Paperwork Reduction Act
As specified in 7 U.S.C. 9091(c)(2), the regulations to implement
payment limitation and payment eligibility are exempt from:
<bullet> The Paperwork Reduction Act (44 U.S.C. chapter 35), and
<bullet> The notice and comment provisions of 5 U.S.C. 553.
Further, the Administrative Procedure Act (APA, 5 U.S.C. 553(a)(2))
provides that the provisions requiring notice and comment and a 30-day
delay in the effective date do not apply when the rule involves
specified actions, including matters relating to benefits or contracts.
This rule governs payments to agricultural producers and therefore
falls within the benefits exemption.
In addition, 7 U.S.C. 9091(c)(3) directs the Secretary to use the
authority provided in 5 U.S.C. 808 of the Congressional Review Act
(CRA), which would ordinarily necessitate delaying its effective date
for 60 days (5 U.S.C. 801(a)(3)(A)). The CRA, at 5 U.S.C. 808(2),
allows an agency to make such regulations effective immediately if the
agency finds there is good cause to do so. USDA has determined that
such good cause exists here. This rule is implementing mandatory
requirements of the OBBBA, and the regulatory changes included in this
rule are necessary to administer CCC programs that help the
beneficiaries of those programs sustain their normal business
operations. As a result, USDA finds that notice and public procedure
are contrary to the public interest. Therefore, USDA is not required to
delay the effective date for 60 days from the date of publication to
allow for Congressional review. Accordingly, this rule is effective
upon publication in the Federal Register.
This rule is exempt from the regulatory analysis requirements of
the Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)
because it involves matters relating to benefits. The requirements for
the regulatory flexibility analysis in 5 U.S.C. 603 and 604 are
specifically tied to the requirement for a proposed rule by section 553
or any other law; in addition, the definition of rule in 5 U.S.C. 601
is tied to the publication of a proposed rule.
B. Executive Orders 12866, 13563, and 14192
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review,''
direct agencies to assess all costs and benefits of available
regulatory alternatives and, if regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety effects, distributive
impacts, and equity). Executive Order 13563 emphasized the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. Executive Order 14192,
``Unleashing Prosperity Through Deregulation,'' announced the
Administration policy to significantly reduce the private expenditures
required to comply with Federal regulations to secure America's
economic prosperity and national security and the highest possible
quality of life for each citizen and to alleviate unnecessary
regulatory burdens placed on the American people. In line with the
Executive Order requirements, the Agency chose this regulatory
approach, which implements mandatory provisions of the OBBBA and
clarifies and simplifies program requirements, to maximize benefits and
minimize burden on American producers. This rule is not an Executive
Order 14192 regulatory action because it does not impose any more than
de minimis regulatory costs.
The Office of Management and Budget (OMB) designated this rule as
significant under Executive Order 12866, and therefore, OMB has
reviewed this rule. The costs and benefits of this rule are summarized
below. The full CBA is available on <a href="http://regulations.gov">regulations.gov</a>.
C. Cost Benefit Analysis Summary
Prior to OBBBA, farms operated as LLCs or S corporations were
treated as a single ``person'' for payment limitation purposes. As a
result, a farming operation owned by multiple family members under one
LLC was capped at a single (often, $125,000) payment limit. With OBBBA,
LLCs and S corporations are now treated as ``pass-through entities''
for the purposes of payment limits. This allows each member of the
entity who is ``actively engaged in farming'' to qualify for their own
individual payment limit. This change is projected to increase outlays
by $597 million over 10 years.
This rule also makes a discretionary change to permit members of a
general partnership or joint venture to receive a salary and qualify
the farming operation for a payment limit; prior, salaried members of
these two entity types could not qualify for farm program payments.
This provision is not expected to significantly change outlays because
many general partnerships and joint ventures added an ownership layer
prior to this change, allowing them to receive payment even though the
members were salaried.
In general, a person or legal entity is not eligible to receive
payments if the average AGI of the person or legal entity exceeds
$900,000 for the 3 taxable years preceding the immediately preceding
tax year. OBBBA creates an exception for ELAP, LFP, LIP, TAP, and NAP
if the producer can demonstrate that at least 75 percent of their
income is from agriculture. This change is expected to
[[Page 32884]]
increase outlays by $267 million over 10 years.
In total, this rule is expected to increase outlays by $864 million
over 10 years (or $86.4 million annually).
D. Environmental Review
The environmental impacts have been considered in a manner
consistent with the provisions of the National Environmental Policy Act
(NEPA, 42 U.S.C. 4321-4347) and the USDA regulation for compliance with
NEPA (7 CFR part 1b).
This rule implements primarily mandatory changes to payment
limitation and payment eligibility provisions that are required by the
OBBBA, with limited discretionary aspects that do not have the
potential to impact the human environment as they are administrative.
Accordingly, these discretionary aspects are covered by the FSA
Categorical Exclusions specified in 7 CFR 1b.4(c)(16)(ix) that applies
to safety net programs and Sec. 1b.(c)(16)(vii) that applies to price
support programs.
No Extraordinary Circumstances (Sec. 1b.3(f)) exist because these
are administrative payment programs. As such, the implementation of the
payment eligibility and payment limitation provisions do not constitute
major Federal actions that would significantly affect the quality of
the human environment, individually or cumulatively. Therefore, FSA
will not prepare an environmental assessment or environmental impact
statement for this action and, consistent with Sec. 1b.3(g), this
document serves as the programmatic finding of applicability and no
extraordinary circumstance (FANEC) for this Federal action.
E. Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, ``Consultation and Coordination with Indian
Tribal Governments.'' Executive Order 13175 requires Federal agencies
to consult and coordinate with Tribes on a Government-to-Government
basis on policies that have Tribal implications, including regulations,
legislative comments or proposed legislation, and other policy
statements or actions that have substantial direct effects on one or
more Indian Tribes, on the relationship between the Federal Government
and Indian Tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes.
USDA has assessed the impact of this rule on Indian Tribes and
determined that this rule does not, to our knowledge, have Tribal
implications that required Tribal consultation at this time. If a Tribe
requests consultation, the USDA Farm Service Agency will work with the
FSA Federal Preservation Officer, who will engage the Office of Tribal
Relations as needed, to ensure meaningful consultation is provided.
F. Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L.
104-4) requires Federal agencies to assess the effects of their
regulatory actions of State, local, and Tribal governments or the
private sector. Agencies generally must prepare a written statement,
including cost benefit analysis, for proposed and final rules with
Federal mandates that may result in expenditures of $100 million or
more in any 1 year for State, local or Tribal governments, in the
aggregate, or to the private sector. UMRA generally requires agencies
to consider alternatives and adopt the more cost effective or least
burdensome alternative that achieves the objectives of the rule. This
rule contains no Federal mandates, as defined in Title II of UMRA, for
State, local and Tribal governments or the private sector. Therefore,
this rule is not subject to the requirements of sections 202 and 205 of
UMRA.
G. E-Government Act Compliance
FSA is committed to complying with the E-Government Act of 2002, to
promote the use of the internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
Federal Assistance Programs
The titles and numbers of the Federal assistance programs, as found
in the Assistance Listing, to which this document applies are:
10.051--Commodity Loans and Loan Deficiency Payments;
10.069--Conservation Reserve Program;
10.088--Livestock Indemnity Program;
10.089--Livestock Forage Disaster Program;
10.091--Emergency Assistance for Livestock, Honeybees, and Farm-
Raised Fish Program;
10.092--Tree Assistance Program;
10.113--Agriculture Risk Coverage;
10.112--Price Loss Coverage;
10.451--Noninsured Assistance;
10.912--Environmental Quality Incentives Program; and
10.917--Agricultural Management Assistance.
List of Subjects in 7 CFR Part 1400
Agriculture, Grant programs--agriculture, Loan programs--
agriculture, Natural resources, Price support programs.
For the reasons discussed above, CCC amends the regulations in 7
CFR part 1400 as follows:
PART 1400--PAYMENT LIMITATION AND PAYMENT ELIGIBILITY
0
1. The authority citation for part 1400 continues to read as follows:
Authority: 7 U.S.C. 1308, 1308-1, 1308-2, 1308-3, 1308-3a, 1308-
4, and 1308-5; and Title I, Pub. L. 115-123.
Subpart A--General Provisions
0
2. Revise Sec. 1400.2(g) to read as follows.
Sec. 1400.2 Administration.
* * * * *
(g) Initial determinations concerning the provisions of this part
will be made by the FSA State office or a review team designated by the
FSA State Executive Director with respect to any farm operating plan
that is for a qualified pass-through entity with six or more members.
* * * * *
0
3. Amend Sec. 1400.3 as follows:
0
a. Add the definition of ``Agritourism'' in alphabetical order;
0
b. In the definition of ``Attribution'', remove the words ``legal
entity, joint venture, or general partnership'' and add '' legal entity
or qualified pass-through entity'' in their place;
0
c. Add the definition of ``Enrolled agent'' in alphabetical order;
0
d. In the definition of ``Farming operation'', remove the words ``joint
operations'' and add ``qualified pass-through entities'' in their
place;
0
e. Add the definitions of ``Income derived from farming, ranching, or
silviculture activities'', ``Program year'', and ``Qualified pass-
through entity'' in alphabetical order.
The additions read as follows.
Sec. 1400.3 Definitions.
* * * * *
Agritourism means a form of commercial, recreational, or
educational enterprise that links agricultural production and
processing with tourism to attract visitors onto a farm, ranch, or
other agricultural business for the purposes of entertaining and
educating visitors while generating income for the farm, ranch, or
business owner.
* * * * *
Enrolled agent means an individual enrolled as an agent in
accordance with
[[Page 32885]]
part 10 of Title 31 of the Code of Federal Regulations.
* * * * *
Income derived from farming, ranching, or silviculture activities
means, as determined by FSA, income of an individual or legal entity
derived from the following sources:
(1) Production of crops and unfinished raw forestry products;
(2) Production of livestock, aquaculture products used for food,
honeybees, and products derived from livestock;
(3) Production of farm-based renewable energy;
(4) Selling (including the sale of easements and development
rights) of farm, ranch, and forestry land, water or hunting rights, or
environmental benefits;
(5) Rental or lease of land or equipment used for farming,
ranching, or forestry operations, including water or hunting rights;
(6) Processing, packing, storing, and transportation of farm,
ranch, or forestry commodities including renewable energy;
(7) Feeding, rearing, or finishing of livestock;
(8) Payments of benefits, including benefits from risk management
practices, crop insurance indemnities, and catastrophic risk protection
plans;
(9) Sale of land by a person or legal entity that has a beneficial
interest in the land that has been used for agricultural purposes;
(10) Payments and benefits authorized under any program made
available and applicable to payment eligibility and payment limitation
rules, including disaster assistance and ad-hoc programs unless
otherwise specified in the individual program regulations;
(11) Income reported on Internal Revenue Service (IRS) Schedule F,
IRS Form 4835, or other schedule or form used by the person or legal
entity to report income from such operations to the IRS;
(12) Wages or dividends received from a closely held corporation,
an Interest Charge Domestic International Sales Corporation (IC-DISC),
or legal entity comprised entirely of family members when more than 50
percent of the legal entity's gross receipts for each tax year are
derived from farming, ranching, or silviculture activities as defined
in this subpart;
(13) Agritourism;
(14) Direct-to-consumer marketing of agricultural products produced
as part of the farming operation including, but not limited to, farm
stands, community-supported agriculture, U-pick operations, farmers'
markets, and online sales;
(15) The sale or trade of agricultural equipment by a person or
legal entity that owns such equipment; and
(16) Any other activity related to farming, ranching, and
silviculture, as determined by FSA.
* * * * *
Program year means the fiscal year, October 1 through September 30,
unless otherwise provided in individual program regulations of this
chapter.
* * * * *
Qualified pass-through entity means:
(1) 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.);
(2) An S corporation as defined in 26 U.S.C. 1361(a);
(3) A limited liability company that does not affirmatively elect
to be treated as a corporation for federal tax purposes; and
(4) A joint venture or general partnership.
* * * * *
Sec. 1400.6 [Amended]
0
4. In Sec. 1400.6(a), remove the words ``joint operations'' and add
``qualified pass-through entities'' in their place.
0
5. In Sec. 1400.10, add paragraph (e) to read as follows.
Sec. 1400.10 Notification of interests.
* * * * *
(e) A legal entity will not be eligible to receive any payment for
programs specified in Sec. 1400.1, or any other program as provided in
individual program regulations in this chapter, when the name, address,
and ownership share of each person or legal entity that holds a direct
or indirect ownership interest in the legal entity is not provided to
USDA.
Subpart B--Payment Limitation
0
6. Add Sec. 1400.100 to read as follows.
Sec. 1400.100 Limited Liability Companies and Corporations.
(a) For program year 2026 and subsequent years, a farming operation
that is a limited liability company or corporation must provide a
certification of their farm operating plan. Certifications must
document the entity type as:
(1) A C corporation or S corporation; or
(2) An LLC pass-through or an LLC that affirmatively elects to be
treated as a corporation for federal income tax purposes.
(b) Certifications made according to paragraph (a) of this section
will be effective for the program year of the certification and future
years.
(c) For program year 2026, a farming operation's organizational
structure as of September 15, 2026, will be used to determine the
operation's entity type.
(d) For program year 2027 and subsequent years, the farming
operation's organizational structure as of June 1 will be used to
determine the entity type.
0
7. In Sec. 1400.105, add paragraph (d)(3) to read as follows.
Sec. 1400.105 Attribution of payments.
* * * * *
(d) * * *
(3) For program year 2026, the applicable date for the purpose of
administering paragraphs (d), (d)(1), and (d)(2) of this section for
qualified pass-through entities will be September 15, 2026.
* * * * *
0
8. In Sec. 1400.106, revise paragraph (b) to read as follows.
Sec. 1400.106 Payment limits.
* * * * *
(b)(1) Payments made for program year 2025 and prior years to a
joint operation cannot exceed, for each payment specified in subpart A
of this part, the amount determined by multiplying the maximum payment
amount specified in subpart A of this part by the number of persons and
legal entities, other than joint operations, that comprise the
ownership of the joint operation.
(2) Payments made for program year 2026 and subsequent years to a
qualified pass-through entity cannot exceed, for each payment specified
in subpart A of this part, the amount determined by multiplying the
maximum payment amount specified in subpart A of this part by the
number of persons and legal entities, other than qualified pass-through
entities, that comprise the ownership of the qualified pass-through
entity.
* * * * *
Subpart C--Payment Eligibility
Sec. 1400.201 [Amended]
0
9. In Sec. 1400.201(d)(4), remove the word ``Whether'' and add ``For
program year 2025 and prior years, whether'' in its place.
Sec. 1400.202 [Amended]
0
10. Amend Sec. 1400.202 as follows:
0
a. In paragraph (c)(1), remove the words ``joint operation, or legal
entity'' and add ``qualified pass-through entity, or other legal
entity'' in their place; and
[[Page 32886]]
0
b. In paragraph (c)(2), remove the words ``joint operations, or legal
entities'' and add the words ``qualified pass-through entities, or
other legal entities'' in their place.
0
11. Amend Sec. 1400.203 as follows:
0
a. Revise the section heading, paragraph (a) introductory text, and
paragraph (b); and
0
b. In paragraph (c), remove the word ``If'' and add ``For program year
2025 and prior, if'' in its place; and
0
c. Add paragraph (d).
The revisions and addition read as follows.
Sec. 1400.203 Joint operations and qualified pass-through entities.
(a) For program year 2025 and prior years, a member of a joint
operation, and for program year 2026 and subsequent years, a member of
a qualified pass-through entity, will be considered to be actively
engaged in farming with respect to a farming operation if the member:
* * * * *
(b)(1) For program year 2025 and prior years, for a farming
operation conducted by a joint operation in which the capital,
equipment, or land is contributed by the joint operation, the capital,
equipment, or land:
(i) To meet the requirements of paragraph (a)(1)(i) of this
section, and if contributed directly by the joint operation, must not
be acquired as a loan made to, guaranteed, co-signed, or secured by any
person, legal entity, or other joint operation that has an interest in
the farming operation; and
(ii) To meet the requirements of paragraphs (a)(2) and (3) of this
section, and if acquired as a result of a loan made to, guaranteed, co-
signed, or secured by the persons, legal entities, or joint operations
with an interest in the operation, the loan must:
(A) Bear the prevailing interest rate; and
(B) Have a repayment schedule considered reasonable and customary
for the area.
(2) For program year 2026 and subsequent years, for a farming
operation conducted by a qualified pass-through entity in which the
capital, equipment, or land is contributed by the qualified pass-
through entity, the capital, equipment, or land:
(i) To meet the requirements of paragraph (a)(1)(i) of this
section, and if contributed directly by the qualified pass-through
entity, must not be acquired as a loan made to, guaranteed, co-signed,
or secured by any person, legal entity, or other qualified pass-through
entity that has an interest in the farming operation; and
(ii) To meet the requirements of paragraphs (a)(2) and (3) of this
section, and if acquired as a result of a loan made to, guaranteed, co-
signed, or secured by the persons, legal entities, or qualified pass-
through entities with an interest in the operation, the loan must:
(A) Bear the prevailing interest rate; and
(B) Have a repayment schedule considered reasonable and customary
for the area.
* * * * *
(d) For program year 2026 and subsequent years, if a qualified
pass-through entity separately makes a significant contribution of
capital, equipment, or land, or a combination of capital, equipment, or
land, and the qualified pass-through entity meets the provisions of
Sec. 1400.201(b)(2) and (3), the members of the qualified pass-through
entity who make a significant contribution, whether compensated or not
compensated, of active personal labor, active personal management, or a
combination of active personal labor and active personal management to
the farming operation as specified in paragraph (a)(1)(ii) of this
section will be considered to be actively engaged in farming with
respect to the farming operation.
0
12. Amend Sec. 1400.204 as follows:
0
a. Revise paragraph (a) introductory text;
0
b. In paragraph (d)(1), remove the words ``joint operation'' and add
``qualified pass-through entity'' in their place; and
0
c. In paragraph (d)(2), remove the words ``joint operations'' and add
``qualified pass-through entities'' in their place.
The revision reads as follows.
Sec. 1400.204 Limited partnerships, limited liability partnerships,
limited liability companies, corporations, and other similar legal
entities.
(a) For program year 2025 and prior years, a limited partnership,
limited liability partnership, limited liability company, corporation,
or other similar legal entity; or for program year 2026 and subsequent
years, a C corporation, limited liability company that affirmatively
elects to be treated as a corporation for federal income tax purposes,
or other similar legal entity will be considered to be actively engaged
in farming with respect to a farming operation if:
* * * * *
Sec. 1400.205 [Amended]
0
13. Amend Sec. 1400.205 as follows:
0
a. In paragraph (e)(1), remove the words ``joint operation'' and add
``qualified pass-through entity'' in their place; and
0
b. In paragraph (e)(2), remove the words ``joint operations'' and add
``qualified pass-through entities'' in their place.
Sec. 1400.206 [Amended]
0
14. Amend Sec. 1400.206 as follows:
0
a. In paragraph (b)(1), remove the words ``joint operation'' and add
``qualified pass-through entity'' in their place; and
0
b. In paragraph (b)(2), remove the words ``joint operations'' and add
``qualified pass-through entities'' in their place.
0
15. Amend Sec. 1400.207 as follows:
0
a. In paragraph (b), remove the words ``A landowner'' and add ``For
program year 2025 and prior years, a landowner'', and remove the words
``revert to the member'' and add ``revert to the members'' in their
place; and
0
b. Add paragraph (c).
The addition reads as follows.
Sec. 1400.207 Landowners.
* * * * *
(c) For program year 2026 and subsequent years, a landowner also
includes a member of a qualified pass-through entity if the qualified
pass-through entity holds title to land in the name of the qualified
pass-through entity and if the qualified pass-through entity or its
members submit adequate documentation to determine that, upon
dissolution of the qualified pass-through entity, the title to the land
owned by the qualified pass-through entity will revert to the members
of the qualified pass-through entity.
0
16. Revise Sec. 1400.214(d) to read as follows.
Sec. 1400.214 Cash rent tenants.
* * * * *
(d)(1) For program year 2025 and prior years, if the cash rent
tenant is a joint operation, then each member or their spouse must make
a significant contribution of active personal labor or active personal
management as specified in Sec. 1400.203(a)(1)(ii) to be considered
eligible for the member's share of the program payments received by the
joint operation on the cash rented land.
(2) For program year 2026 and subsequent years, if the cash rent
tenant is a qualified pass-through entity, then each member or their
spouse must make a significant contribution of active personal labor or
active personal management as specified in Sec. 1400.203(a)(1)(ii) to
be considered eligible for the member's share of the program payments
received by the
[[Page 32887]]
qualified pass-through entity on the cash rented land.
* * * * *
Subpart E--Foreign Persons
0
17. Revise Sec. 1400.401(b)(2) to read as follows.
Sec. 1400.401 Eligibility.
* * * * *
(b) * * *
(2) In determining whether more than 10 percent of the ownership of
a legal entity is held by persons who are not citizens of the United
States or by lawful aliens, the ownership interest will be the interest
held on June 1 of each year.
* * * * *
Subpart F--Average Adjusted Gross Income Limitation
Sec. 1400.500 [Amended]
0
18. In Sec. 1400.500(a), remove the words ``joint venture or general
partnership'' and add ``qualified pass-through entity'' in their place.
0
19. Revise Sec. 1400.502(a) introductory text to read as follows.
Sec. 1400.502 Compliance and enforcement.
(a) To comply with the average adjusted gross income limitation,
for program year 2025 and prior years, a person or legal entity,
including all interest holders in a legal entity, general partnership,
or joint venture, and for program year 2026 and subsequent years, a
person or legal entity other than a qualified pass-through entity,
including all interest holders in a legal entity and qualified pass-
through entity must provide annually the following as required by CCC:
* * * * *
Sec. 1400.503 [Amended]
0
20. Amend Sec. 1400.503 as follows:
0
a. In paragraph (a), remove the words ``legal entity, general
partnership, or joint venture'' and add ``legal entity or qualified
pass-through entity'' both times they appear; and
0
b. In paragraph (b), add the words ``including a qualified pass-through
entity,'' after ``legal entity,''.
0
21. Add new Sec. 1400.504 to read as follows.
Sec. 1400.504 Exceptions.
(a) Beginning with program year 2026 unless otherwise specified,
the $900,000 average adjusted gross income limitation of this subpart
is waived for a person or legal entity when:
(1) The person or legal entity derives 75 percent or more of their
average gross income from farming, ranching, or silviculture
activities;
(2) The program payment or benefit is an excepted payment as
provided in paragraph (b) of this section; and
(3) The person or legal entity provides a certification acceptable
to FSA that is verified by a licensed certified public accountant,
attorney, or an authorized enrolled agent.
(b) Beginning with program year 2026 unless otherwise specified and
for the purpose of this subpart, an excepted payment or benefit means a
payment or benefit issued through:
(1) The Livestock Forage Disaster Program (LFP), Livestock
Indemnity Program (LIP), and the Emergency Assistance for Livestock,
Honeybees and Farm-raised Fish Program (ELAP), part 1416 of this
chapter;
(2) The Tree Assistance Program (TAP), part 1416 of this chapter;
(3) The Noninsured Crop Disaster Assistance Program (NAP), part
1437 of this chapter;
(4) The Conservation Reserve Program (CRP), part 1410 of this
chapter received on or after October 1, 2024; and
(5) The Natural Resources Conservation Service (NRCS) conservation
programs of this title including, but not limited to, the Agricultural
Management Assistance (AMA) program, Conservation Stewardship Program
(CSP), Environmental Quality Incentives Program (EQIP), and
Agricultural Conservation Easement Program (ACEP), received on or after
October 1, 2024.
William Beam,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2026-11002 Filed 6-1-26; 8:45 am]
BILLING CODE 3411-E2-P
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</html>Indexed from Federal Register on June 2, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.