7 C.F.R. § 1400.201

General provisions for determining whether a person or legal entity is actively engaged in farming

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(a) To be considered eligible to receive payments with respect to a particular farming operation, a person or legal entity must be actively engaged in farming with respect to the operation.

(b) Actively engaged in farming means, except as otherwise provided in this part, that the person or legal entity:

(1) Independently and separately makes a significant contribution to a farming operation of:

(i) Capital, equipment, or land, or a combination of capital, equipment, or land and

(ii) Active personal labor or active personal management, or a combination of active personal labor and active personal management;

(2) Has a share of the profits or losses from the farming operation commensurate with the person's or legal entity's contributions to the operation; and

(3) Makes contributions to the farming operation that are at risk for a loss, with the level of risk being commensurate with the person's or legal entity's claimed share of the farming operation.

(c) All of the following factors will be taken into consideration in determining if the person or legal entity is independently and separately contributing a significant amount of capital, equipment, or land, or a combination of capital, equipment, or land, to the farming operation:

(1) A separate and distinct interest in the land, crop, and livestock involved in the farming operation;

(2) The demonstration of separate and total responsibility for the interest in the land, crop, and livestock in the farming operation; and

(3) All funds and business accounts of the farming operation are separate from that of any other person and legal entity.

(d) In determining if the person or legal entity is independently and separately contributing a significant amount of active personal labor or active personal management, all of the following factors will be taken into consideration:

(1) The types of crops and livestock produced by the farming operation;

(2) The normal and customary farming practices of the area;

(3) The total amount of labor and management necessary for the farming operation in the area; and

(4) For program year 2025 and prior years, whether the person or legal entity receives compensation for the labor and management activities.

[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52039, Aug. 24, 2020; 91 FR 32885, June 2, 2026]

Notes of Decisions

Cited in 4 cases, 2005–2018 · leading case: Jason Mages v. Ann Veneman, 431 F.3d 1132 (8th Cir. 2005).

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Jason Mages v. Ann Veneman, 431 F.3d 1132 (8th Cir. 2005). “7 C.F.R. § 1400.201 (a). This is to prevent passive investors from receiving farm program payments.”

N. Dakota Farm Bureau, Inc. v. Stenehjem, 333 F. Supp. 3d 900 (2018). · cites it 2× “1987) (finding the defendant was actively engaged in farming under Minnesota law because he harvested some hay himself); 7 C.F.R. § 1400.201 (discussing the meaning of actively engaged in farming under Department of Agriculture regulations as including "active personal labor" or…”

Harmon v. United States Dep't of Agric., 666 F. App'x 698 (9th Cir. 2016). “1 Under the definitions set forth in the regulations that were in force at the time Harmon filed his application as an individual, the agency determined that in order to be “a person who is eligible to receive payments with respect to a particular farming operation,” Harmon…”

Mitchell v. Johanns, 400 F. Supp. 2d 1133 (S.D. Iowa 2005). “While these findings were used to support the NAD’s determination that the individuals were not “aetively engaged in farming,” see 7 C.F.R. § 1400.201 , nothing in the regulations indicates that the same “person” determination could not be used to support a finding of joint and…”

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