B-141720, JAN. 29, 1960

B-141720, JAN. 29, 1960

TO THE SECRETARY OF AGRICULTURE:

BY LETTER DATED JANUARY 15, 1960, THE ASSISTANT SECRETARY OF AGRICULTURE TRANSMITTED HERE A COPY OF YOUR PROPOSED REGULATIONS RELATING TO A STATUTORY LIMITATION ON PRICE SUPPORTS. HE REQUESTS A DECISION AS TO WHETHER THE RULES CONTAINED IN SECTION 477.105 OF THE PROPOSED REGULATIONS ARE LEGALLY AUTHORIZED FOR DETERMINING WHETHER CERTAIN INDIVIDUALS OR LEGAL ENTITIES ARE TO BE TREATED AS ONE PERSON OR SEPARATE PERSONS FOR THE PURPOSE OF THE $50,000 LIMITATION CONTAINED IN A PROVISION IN TITLE II OF THE DEPARTMENT OF AGRICULTURE AND FARM CREDIT ADMINISTRATION APPROPRIATION ACT, 1960 (PUBLIC LAW 86 80), 73 STAT. 167, 177, UNDER THE HEADING ,COMMODITY CREDIT CORPORATION," SUBHEADING "LIMITATION ON ADMINISTRATIVE EXPENSES.'

THE PROVISION IN QUESTION IS, IN PERTINENT PART, AS FOLLOWS (73 STAT. 178, 179):

"* * * PROVIDED FURTHER, (1) THAT NO PART OF THIS AUTHORIZATION SHALL BE USED TO FORMULATE OR CARRY OUT A PRICE SUPPORT PROGRAM FOR 1960 UNDER WHICH A TOTAL AMOUNT OF PRICE SUPPORT IN EXCESS OF $50,000 WOULD BE EXTENDED THROUGH LOANS, PURCHASES, OR PURCHASE AGREEMENTS MADE OR MADE AVAILABLE BY COMMODITY CREDIT CORPORATION TO ANY PERSON ON THE 1960 PRODUCTION OF ANY AGRICULTURAL COMMODITY DECLARED BY THE SECRETARY TO BE IN SURPLUS SUPPLY, UNLESS DECLARED BY THE SECRETARY TO BE IN SURPLUS SUPPLY, UNLESS (A) SUCH PERSON SHALL REDUCE HIS PRODUCTION OF SUCH COMMODITY FROM THAT WHICH SUCH PERSON PRODUCED THE PRECEDING YEAR, IN SUCH PERCENTAGE, NOT TO EXCEED 20 PERCENTUM, AS THE SECRETARY MAY DETERMINE TO BE ESSENTIAL TO BRING PRODUCTION IN LINE WITHIN A REASONABLE PERIOD OF TIME WITH THAT NECESSARY TO PROVIDED AN ADEQUATE SUPPLY TO MEET DOMESTIC AND FOREIGN DEMANDS, PLUS ADEQUATE RESERVES, OR (B) SUCH PERSON SHALL AGREE TO REPAY ALL AMOUNTS ADVANCED IN EXCESS OF $50,000 FOR ANY AGRICULTURAL COMMODITY WITHIN TWELVE MONTHS FROM THE DATE OF THE ADVANCE OF SUCH FUNDS OR AT SUCH LATER DATE AS THE SECRETARY MAY DETERMINE, (2) THAT THE TERM "PERSON" SHALL MEAN AN INDIVIDUAL, PARTNERSHIP, FIRM, JOINT- STOCK COMPANY, CORPORATION, ASSOCIATION, TRUST, ESTATE, OR OTHER LEGAL ENTITY, OR A STATE, POLITICAL SUBDIVISION OF A STATE, OR ANY AGENCY THEREOF, * * * AND (4) THAT THE SECRETARY OF AGRICULTURE SHALL ISSUE REGULATIONS PRESCRIBING SUCH RULES AS HE DETERMINED NECESSARY TO CARRY OUT THIS PROVISION.'

SECTION 477.105 OF THE PROPOSED REGULATIONS SPECIFICALLY REFERRED TO IN THE ASSISTANT SECRETARY'S LETTER IS ENTITLED "DETERMINATION OF WHEN MULTIPLE INDIVIDUALS OR LEGAL ENTITIES CONSTITUTE ONE OR SEPARATE PERSONS.' IN CONNECTION WITH SECTION 477.105 THE ASSISTANT SECRETARY STATES:

"* * * YOU WILL NOTE THAT A WIFE MAY BE CONSIDERED AS A PERSON SEPARATE FROM HER HUSBAND TO THE EXTENT OF HER INTEREST AS A SEPARATE PRODUCER ON A FARM OR FARMS OWNED, IN WHOLE OR IN PART, BY HER AS A SEPARATE ESTATE, PROVIDED THE HUSBAND TAKES NO PART IN OR OWNS NO INTEREST IN ANY PORTION OF THE PRODUCTION ON SUCH FARM OR FARMS. A CORPORATION IN WHICH ALL OR SUBSTANTIALLY ALL OF THE STOCK (90 PERCENT OR MORE) IS OWNED BY AN INDIVIDUAL, OR BY AN INDIVIDUAL AND HIS OR HER SPOUSE, OR BY A LEGAL ENTITY, WOULD NOT BE CONSIDERED AS A SEPARATE PERSON. A PERSON WHO HAS PREVIOUSLY BEEN RENTING HIS FARM FOR ONE THIRD OR ONE-FOURTH OF THE CROP OR THE PROCEEDS THEREFROM MAY CHANGE HIS RENTAL AGREEMENT AND PROVIDE FOR CASH RENT SO THAT THE LIMITATIONS WILL NOT APPLY TO HIM. TWO OR MORE INDIVIDUALS WHO HAVE BEEN OPERATING AS A PARTNERSHIP OR A CORPORATION IN THE PAST MAY DISSOLVE THE PARTNERSHIP OR CORPORATION AND EACH INDIVIDUAL WOULD QUALIFY AS A SEPARATE PERSON FOR PURPOSES OF THE LIMITATION. PERSON MAY TRANSFER PART OF HIS FARM OR FARMING OPERATIONS TO AN ADULT SON, FOR EXAMPLE, AND IF THE SON IS ACTUALLY ENGAGED IN THE PRODUCTION OF THE CROP, HE MAY QUALIFY AS A SEPARATE PERSON FOR PURPOSES OF THE LIMITATION. ANY TRANSFER, HOWEVER, ON OR AFTER THE DATE OF ENACTMENT OF THE LIMITATION TO MINOR CHILDREN OR FROM HUSBAND TO WIFE OR WIFE TO HUSBAND WOULD BE PRESUMED TO BE FOR THE PURPOSE OF EVADING THE LIMITATION. ALSO THE FORMATION OF ANY CORPORATION, PARTNERSHIP, OR OTHER LEGAL ENTITY ON OR AFTER THE DATE OF ENACTMENT OF THE LIMITATION FOR THE PURPOSE OF EVADING THE LIMITATION WOULD NOT BE PERMITTED. INDIVIDUALS WHO ARE JOINT TENANTS OR TENANTS IN COMMON, EXCEPT THOSE WHO ARE HUSBAND AND WIFE OR ARE OPERATING AS A PARTNERSHIP, WOULD EACH BE CONSIDERED AS A SEPARATE PERSON. THE REGULATIONS PROVIDE THAT SUBJECT TO THE OTHER PROVISIONS THEREIN,"A PERSON MAY EXERCISE HIS OR HER RIGHT, HERETOFORE EXISTING UNDER LAW, TO DIVIDE, SELL, TRANSFER, RENT, OR LEASE HIS PROPERTY IF SUCH DIVISION, SALE, TRANSFER, RENTAL ARRANGEMENT OR LEASE IS LEGALLY BINDING AS BETWEEN THE PARTIES THERETO.'"

PART "/4)" OF THE STATUTORY PROVISION QUOTED ABOVE VESTS BROAD AUTHORITY IN THE SECRETARY OF AGRICULTURE. IT IS CLEAR THAT UNDER PART "/4)" YOU MAY ISSUE REGULATIONS PRESCRIBING SUCH RULES AS YOU DETERMINE NECESSARY TO CARRY OUT THE PROVISION, PROVIDED, OF COURSE, THAT THE RULES PRESCRIBED ARE NOT INCONSISTENT WITH THE LAW. CF. 32 COMP. GEN. 410. THESE APPEARS TO BE NOTHING IN THE APPROPRIATION ACT CONTAINING THE LIMITATION, OR IN THE LEGISLATURE HISTORY THEREOF, WHICH WOULD PROHIBIT YOU FROM INCLUDING IN THE PROPOSED REGULATIONS THE RULES CONTAINED IN SECTION 477.105 THEREOF, IF YOU DETERMINE THAT SUCH RULES ARE NECESSARY TO CARRY OUT THE PROVISION IN QUESTION. THE PROVISION LIMITS THE TOTAL AMOUNT OF PRICE SUPPORT TO BE EXTENDED TO ANY PERSON TO $50,000, UNLESS THE PERSON IS EXEMPT FROM THE LIMITATION, AND DEFINES THE TERM "PERSON.' IT DOES NOT APPEAR THAT UNDER THE RULES IN SECTION 477.105 OF THE PROPOSED REGULATIONSA "PERSON," AS THAT TERM IS DEFINED IN THE INVOLVED STATUTORY PROVISION WILL BE ELIGIBLE FOR PRICE SUPPORT IN AN AMOUNT IN EXCESS OF THE LIMITATION SET FORTH THEREIN. THUS, IT DOES NOT APPEAR THAT THE PROPOSED RULES IN SECTION 477.105 ARE INCONSISTENT WITH THE LAW. THE QUESTION PRESENTED IS ANSWERED ACCORDINGLY.