War of words erupts over payment limit rules

It’s the issue that just won’t go away. When Congress passed the 2008 farm bill, the National Cotton Council, the USA Rice Federation, U.S. Rice Producers Association and other farm groups thought they had put the debate on payment limit rules to rest.

The ink was barely dry on the document in June when Charles Grassley, R-Iowa, and Byron Dorgan, D-N.D., the Senate’s permanent payment limit gadflies, sent a letter to Agriculture Secretary Ed Schafer demanding that USDA go beyond the language in the farm bill and deny benefits to growers who do not fit tougher new payment limit standards.

Now another group of senators and House members, all from the South, have written Schafer advising him that USDA should not cause “serious disruptions” in current farming operations by proposing unwarranted changes in the way it makes actively engaged farming determinations.

Twenty senators and more than 40 House members signed separate letters requesting that USDA officials expedite the publication of rules for changes to adjusted gross income and other payment limit rules that are contained in the new farm bill.

“Although the 2008 farm bill provides expedited rule-making for most farm program provisions, sections 1603 and 1604 containing the payment limit and adjusted gross income limitation reforms were specifically required to be implemented through the promulgation of an interim rule,” the senators said in their letter.

“We request that USDA publish these regulations for public comment at the earliest possible date so farmers have an opportunity to review and comment on the proposed regulations.”

The senators said some farmers must make significant adjustments in existing operations to comply with the new rules, and those farmers who will no longer be eligible for program benefits will have to take that into consideration when planning for their 2009 crops and beyond.

The 2008 farm bill requires significant reforms in payment limitations and eligibility but does not require changes in the way individuals or entities are determined to be “actively-engaged-in-farming,” the senators said, adding that implementation of two new income tests and direct attribution will cause significant challenges and require adjustments for many farming operations.

Under the 2008 bill, sign-up for 2009 should begin in October, they said. The law requires that advance Direct Payments be available in December, meaning that the Farm Services Administration and farmers must know the rules before signing up and requesting payments.

“It is important to note that the 2008 farm bill does not require USDA to make any changes to the way individuals and entities are determined to be "actively-engaged" in farming except in the case of a spouse,” the senators’ letter said.

“Although the 2008 farm bill did end the discrimination against spouses being considered as equal farming partners, the change was designed to mesh with existing rules and regulations. Furthermore, we believe it is vitally important to maintain as much consistency as possible with the 2002 farm bill in this important determination given the significant impact of eliminating the three-entity rule and application of two new adjusted gross income tests.

They said interjecting unnecessary changes in the operation of the farm programs “will not only cause further confusion and uncertainty for our farmers but will also go well beyond the Congressional intent of this narrowly crafted provision.”

The ink wasn’t quite dry on the senators’ letter before environmental groups issued statements asking Secretary Schafer to ignore it and the House members letter and the new law’s payment limit provisions.

Calling it an attempt to make an “end run around the farm bill deal on payment limitations,” the Washington, D.C.-based Sustainable Agriculture Coalition said it took strong issue with the letter written by the senators and House members.

“Both the U.S Government Accountability Office and the USDA Commission on the Application of Payment Limitations for Agriculture named the “actively engaged in farming” rules as a key feature of current policy that leads to frequent abuse and weakens the integrity of the programs,” said Ferd Hoefner, the SAC’s policy director.

“In addition, the GAO identified and illustrated associated schemes and devices used by unscrupulous subsidy beneficiaries to channel government payments through non-farming entities back to themselves.”

Hoefner agrees that the issues revolve around interpretation of an agreement reached in the final farm bill negotiations in May that resulted in passage of the law nearly nine months after it was scheduled to be completed.

“Principal investigators struck a compromise outlined in the Statement of the Managers accompanying the bill that mandates USDA to rewrite the rules related to actively engaged farming definitions and to schemes and devices, and issue those new rules for public notice and comment,” he said. “As part of the compromise, the language in the Statement is completely neutral. It requires USDA to rewrite the rules, but does not say whether the Department should loosen or tighten the rules.”

Hoefner said the Grassley-Dorgan letter in June urged USDA to take immediate action to promulgate the new regulation and eliminate the abusive loopholes. The Senators also suggested particular revisions.

“It is simply not true that the farm bill does not require changes to actively engaged rules and schemes and devices employed to evade payment limitations,” said Hoefner. “The Managers of the farm bill did not say how to change the rules, that is true, but USDA remains under an obligation to issue a new set of rules for public notice and comment.

“The working family farmers we represent strongly encourage USDA to pursue their obligations under the terms of the farm bill conference report and to ignore any attempt to try an end run around the compromise. In our view, a deal is a deal. The only confusion and uncertainty now being injected into the debate is by those who want to renege on the deal.”

Speaking at the Sunbelt Expo Tuesday (Oct. 14), Mark Keenum, undersecretary of agriculture for farm and foreign agricultural services, said USDA intends to follow congressional intent when writing the rules for the new law.

“We will do exactly what Congress asked us to do,” he said in comments at a luncheon honoring the Southeastern Farmer of the Year at the Sunbelt Ag Expo in Moultrie, Ga. “That is our mission and our objective as we continue this process.”

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