S-3936-119
Read twice and referred to the Committee on Agriculture, Nutrition, and Forestry.
Sponsored by Tommy Tuberville (R-AL)
What it does
This bill would amend the Consolidated Farm and Rural Development Act to broaden who can qualify for USDA farm ownership, operating, and emergency loans. It would change the ownership threshold language from "a majority" to "at least a 50 percent" interest, and would create new eligibility pathways for "qualified operators" (as defined by the Secretary of Agriculture), operating-only entities where a farm owner holds at least 50% of the applicant entity, and multi-layered "embedded" entities where at least 75% of total ownership interests are held by qualified farm operators.
Who benefits
Farmers and ranchers who operate farms through complex business structures (LLCs, partnerships, family corporations) that previously fell outside eligibility rules. Multi-generational farm families where ownership is split across siblings or relatives who collectively hold majority stakes. Beginning farmers who may operate land they do not fully own. Tenant farmers and farm operators who lease rather than own land. Rural lenders who issue USDA-guaranteed loans and would gain a broader pool of eligible borrowers. Agricultural attorneys and accountants who assist with farm entity structuring.
Who is hurt
Applicants who currently qualify under the existing "majority" ownership standard face no direct harm, but the expanded pool of eligible borrowers could increase competition for a fixed supply of USDA loan funds, potentially lengthening wait times or reducing availability per applicant. Smaller or sole-proprietor farmers who do not use complex entity structures may find the program relatively less targeted to their needs. Taxpayers bear the credit risk on any additional guaranteed or direct loans extended to newly eligible borrowers.
Supporters argue
Supporters argue that modern American agriculture increasingly operates through multi-owner business entities — LLCs, family partnerships, and corporations — and that the existing "majority" ownership rule arbitrarily excludes legitimate working farmers who hold exactly 50% stakes or operate through layered structures. They contend that the bill aligns loan eligibility with the economic reality of farm operations, preserving access to credit for family farms that have reorganized for liability, tax, or succession-planning purposes without changing who actually works the land.
Opponents argue
Opponents argue that loosening ownership thresholds and allowing multi-layered "embedded entities" to qualify could enable larger agricultural investors or non-farming interests to access USDA loan programs that were designed for working family farmers. They contend that delegating the definition of "qualified operator" to the Secretary of Agriculture — without statutory guardrails — gives the executive branch broad discretion to expand eligibility further through regulation, potentially diverting limited loan funds away from the small and beginning farmers the program was originally intended to serve.
Constitutional context
Congress has broad authority to set eligibility conditions for federal lending programs under the Spending Clause and the Commerce Clause, as agricultural credit markets are quintessentially interstate economic activity under Wickard v. Filburn (1942). The bill's delegation of "qualified operator" definitions to the Secretary of Agriculture could face scrutiny under the post-Loper Bright (2024) framework, where courts now independently assess whether agency interpretations stay within statutory bounds rather than deferring to the agency's reading.
Checks and balances
Congress sets the eligibility framework; the Secretary of Agriculture gains new discretionary authority to define "qualified operators" and adjust ownership percentage thresholds; courts would independently review any agency definitions under the post-Loper Bright standard, providing a judicial check on executive interpretation.
Historical precedent
The 2018 Farm Bill (P.L. 115-334) previously modified USDA farm loan eligibility rules, including provisions for beginning farmers and entity-based applicants, establishing a pattern of Congress periodically updating ownership and operator definitions in the Consolidated Farm and Rural Development Act.