Recent Blog Posts

By: Carl Zulauf, David Marrison, and Seungki Lee, Ohio State University

This article summarizes information in the US Federal Register of January 12, 2026 that addresses the addition of up to 30 million new commodity base acres effective for the 2026 crop year, making them eligible for ARC (Agriculture Risk Coverage) and PLC (Price Loss Coverage) benefits.  One purpose of this article is help you formulate questions.  Please direct them to FSA (Farm Service Agency) as specifics matter and this article summarizes what are often detailed procedures and rules. 

Owners Make Base Allocation Decisions, Producers Elect and Enroll

FSA does not have discretion to alter this.

New base acres are automatically added to eligible farms unless an owner requests to not add them.  FSA is under no obligation to notify other owners if a base allocation rejection is filed 

Farmers who have not reported plantings to FSA in the past will be allowed to do so and thus have new base acres.  Acres already reported to FSA cannot be modified.

 Eligibility for New Base Acres

1. At least one current covered commodity (see list at the end of the article) must have been planted or have been prevented from being planted because of drought, flood, or other natural disaster or condition beyond the farmer’s control in at least one year during 2019-2023.

Planted plus prevent planted acres are “planted and considered planted” (P&CP) acres.  P&CP is limited to the initial planted or prevent planted crop, except for crops planted in an FSA approved double-crop sequence.  Otherwise, a subsequent planting is not P&CP acres.

and

2. For an individual FSA farm, total P&CP acres must exceed total 9/30/2024 base acres for all covered commodities, excluding unassigned generic cotton base.  Total P&CP acres are:

2019-2023 average (all 5 years) of P&CP acres for covered commodities plus lesser of

a. 15% of total FSA farm acres

Total acres equal total cropland acres minus acres enrolled in a federally funded conservation program that restricts production of agricultural commodities except CRP (Conservation Reserve Program).

or  b. 2019-2023 average (all 5 years) of eligible noncovered commodities P&CP FSA farm acres.

Eligible noncovered commodities are all other crops except

1. current covered commodities 
2. tobacco (consistent with other Commodity Credit Corporation programs),
3. cannabis that does not meet the definition of hemp,
4. commodities reported as tree, bush, vine, grass, idle, or fallow,
5. cover crops reported as cover crops, and
6. CRP and other conservation program acres ineligible for dual payments.

Notes:

Eligibility of hay acres varies.  Alfalfa and other mixed forage acres reported as hay on an FSA acreage report are eligible non-covered commodities.  Grass hay acres are not eligible.  It is suggested you check with FSA if you had hay acres during 2019-2023.

Forage and silage acres of a current covered commodity are eligible as the covered commodity. 

Sugar cane and sugar beets are eligible non-covered commodities.

 

New Base Acres = [(Total P&CP acres calculated as above) plus (unassigned generic base acres) minus (total base acres as of 9/30/2024)]

Unassigned base acres (see note at the end of the article) are converted first to covered commodity base acres, on an acre-for-acre basis.  If unassigned base exceeds allowable new base, the difference remains unassigned base.

A current FSA farm with base acres but does not qualify for new base retains its current base acres.

 

Assignment of Base Acres and Base Yields

No new covered commodities are created.  New base acres are added to base acres of current covered commodities planted on an FSA farm over crop years 2019-2023 using this ratio:

[(2019-2023 average (all 5 years) of a given covered commodity P&CP acres) to (2019-2023 average (all 5 years) of all covered commodities P&CP acres)]

Other than under an established practice with FSA of double cropping covered commodities, an owner must elect what covered commodity on the same acre is used.

An FSA farm’s current PLC yield is used for any new base acre.  If the farm has no PLC yield for the covered commodity, average PLC yield for the county in which the farm is situated or a yield for a similarly situated farm is used.

 

Limits

An FSA farm’s total base acres cannot exceed the FSA farm’s total acres.

New US base acres are capped at 30 million.  If the US cap is effective, an across-the-board, pro-rated reduction is applied to all eligible new base acres.

 

FSA New Base Acre Examples (from US Federal Register, Volume 91, Number 7, 1/12/2026, pages 1045-1046)

2019–2023 Planting History:  25 acres planted to a covered commodity (CC) each year, 25 acres planted to an eligible non-covered commodity (ENCC) each year.

Case I: Current Base Acres = 0

5-year Average Planting History (25 acres (5-year sum of CC P&CP Acres divided by 5) + (lesser of 7.5 acres (15% of total acres) or 25 acres (5-year sum of total ENCC P&CP acres divided by 5)) = 32.5 acres

Maximum potential new base acres = 32.5 [32.5 (5-year average planting history) minus 0 (current base)]

Case II: Current Base Acres = 10

5-year Average Planting History (25 acres (5-year sum of CC P&CP Acres divided by 5) + (lesser of 7.5 acres (15% of total acres) or 25 acres (5-year sum of total ENCC P&CP acres divided by 5)) = 32.5 acres

Maximum potential new base acres = 22.5 [32.5 (5-year average planting history) minus 10 (current base)]

 

Notes:

Current Covered Commodities:  barley, canola, corn, crambe, dry peas, flaxseed, grain sorghum, large chickpeas, lentils, mustard seed, oats, peanuts, rapeseed, long grain rice, medium/short grain rice, temperate japonica rice, safflower, seed cotton, sesame seed, small chickpeas, soybeans, sunflower seed, and wheat.

Unassigned Base Acres:  The 2014 Farm Bill made base acres of upland cotton as of 9/30/2013 ‘‘generic base acres.’’  They were not eligible for ARC and PLC benefits.  The Bipartisan Budget Act of 2018 authorized seed cotton as a covered commodity.  Under this authorization, if a covered commodity, including seed cotton, was not planted or prevented from being planted on the farm during the 2009-2016 crop years, “generic base acres” became “unassigned base acres.”  They are not eligible for ARC or PLC benefits.

 

Earlier today, the U.S. Department of Labor (“DOL”) announced a proposed rule intended to provide greater clarity for both workers and employers on how to determine whether a worker should be classified as an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”) and other related laws. 

Issued on February 26, 2026, the proposal – titled “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act” – would rescind the Biden era rule (the “2024 Rule”) and replace it with a framework very similar to what we saw adopted in 2021 during the first Trump administration (the “2021 Rule”). 

Level One: Ancient Origins 
Under the FLSA, the central question in determining worker classification is whether the individual is economically dependent on the operation, indicating employee status, or is truly “in business for themselves,” which supports independent contractor status. This distinction matters because workers classified as employees are entitled to FLSA protections, including minimum wage and overtime requirements.  

While agricultural employers may benefit from certain exemptions under the FLSA, the analysis does not end there. Many state labor laws look to the FLSA’s definition of “employee” when deciding whether their own wage and hour protections apply. In some cases, state laws impose broader requirements and offer greater protections than federal law. Independent contractors, by contrast, are not covered by FLSA wage and hour protections and generally exempt from state labor law requirements. 

Classification of a worker is vitally important because misclassification can come with harsh consequences. If misclassification is discovered, whether through a DOL investigation, a worker complaint, or a lawsuit, the employer may be required to pay back wages, civil money penalties imposed by the DOL, and any attorneys’ fees and court costs should the matter end up in litigation. Beyond wage-and-hour issues, misclassification can trigger additional liability under other federal and state laws. This might include civil claims for unpaid payroll taxes, unemployment insurance contributions, or workers’ compensation violations, as well as potential criminal penalties in extreme cases of willful or repeated noncompliance.  

Level Two: Trial by Fire
As originally enacted, the FLSA does not lay out a precise test for distinguishing an employee from an independent contractor. Over time, the DOL looked to the courts to develop a workable standard for making such determinations. Through those decisions, the “economic realities test” emerged and became the framework for evaluating whether a worker should be classified as an employee or independent contractor. 

The economic realities test is a “totality of the circumstances” approach, meaning that no single factor controls the outcome. Instead, all relevant factors must be considered and weighed together to assess the true nature of the working relationship. Those factors include: 

1. The nature and degree of control; 
2. The individual’s opportunity for profit or loss;
3. The permanency of the work relationship; 
4. Whether the work being performed is an integral part of the employer’s business; 
5. The worker’s investment in facilities and equipment; and 
6. Skill and initiative. 

For decades courts and the DOL have applied these factors, or slight variations of them, to determine worker status under the FLSA. Over time, however, application of the test varied across jurisdictions, with some courts placing greater emphasis on certain factors than others. This inconsistency led to differing and inconsistent interpretations of worker classification around the country.  

Level Three: The 2021 Rulebook Rewrite 
In 2021, the DOL attempted to address the inconsistent and often subjective application of the economic realities test by issuing a formal independent contractor rule. This 2021 Rule marked the agency’s first effort to create a more standardized framework for distinguishing between employees and independent contractors. 

The 2021 Rule used a variation of the economic realities test but explicitly gave greater probative value to “two core factors.” The two core factors are: 

1. The nature and degree of control over the work; and 
2. The individual’s opportunity for profit or loss.

The Department did not eliminate the other factors of the economic realities test; those factors remained part of the analytical framework under the 2021 Rule. However, the DOL did determine that the two “core factors” carried the most weight when determining whether an individual is economically dependent on an employer. The DOL further explained that when both core factors pointed toward the same classification, there was a “substantial likelihood” that the resulting classification was the correct classification.

Level Four: The 2024 Reset
In early 2024, the DOL published another rule, repealing the 2021 Rule and reverting back to a totality of the circumstances analysis of the economic realities test in which there are no core factors, and all factors are weighed evenly. The 2024 Rule went into effect on March 11, 2024. 

Level Five: 2026 Counterattack
The latest proposed rule would reinstate the framework of the 2021 Rule, with several targeted adjustments designed to provide clearer guidance and promote more consistent interpretation/application of the test. The stated goal is to reduce uncertainty and, in turn, lower the risk of misclassification claims or enforcement actions that can disrupt day-to-day operations. 

In addition to reinstating and slightly modifying the 2021 Rule, the proposal would also apply the independent contractor analysis to the Family and Medical Leave Act (“FMLA”) and the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”), each relying on the FLSA’s definition of “employ.”

In its proposal, the DOL explained that the 2024 Rule failed “to provide effective guidance on how different factors in its multi-factor balancing test should be weighed or applied together.” The DOL contends that it’s two core factor economic realities test is just a result of decades and decades of case law. The Department indicates that after reviewing numerous judicial decisions, “the Department determined that courts tended to focus on two economic reality factors – control and the opportunity for profit or loss.” Thus, the DOL determined that in effect, judges were giving greater weight to these two factors to determine a worker’s classification under the FLSA.

However, the DOL emphasizes that even when the two core factors point toward the same classification they are not “controlling.” Their combined weight may still be outweighed by other considerations, making it “necessary to consider both [core and non-core] factors.” In short, the test that the DOL seeks to readopt is not intended to be applied “in a mechanical way that precludes consideration of all relevant facts and factors.” 

Some other modifications proposed by this new rule include: 

• Clarification on how an employee’s economic dependence on an employer differs from the relationship between independent businesses working together.
• Highlighting that worker classification hinges on dependence for the work, not on how much money the worker makes. 
• Modifying the real-world examples used to apply the proposed 2026 framework to avoid potential ambiguity in the law; and 
• Emphasis on the fact that the actual practice of the worker and potential employer is more relevant than what may be contractually or theoretically possible. 

You can read the proposed rule here.  

Boss Level Unlocked: Power Up with Public Comment
Ever wished you could help shape the rulebook? Well, now’s your chance! 

The proposed rule kicks off a 60-day public comment period, closing April 28, 2026. You can submit a comment on the proposed rule to help provide greater clarity or protections for your specific industry or area of interest. 

You might be wondering, “Can my comment really make a difference?” The answer: absolutely! Agencies are required to consider all substantive comments, and those that are unique, evidence-based, and grounded in real-world experiences are far more likely to influence the final rule than generic statements along the lines of “this is good” or “this is bad.” 

If you have noticed gaps or issues that the DOL has not addressed in this proposal, now is the perfect time to bring them to light. Don’t miss the opportunity to make your voice heard, you never know, your input could truly change the law! 

Comments can be submitted at https://www.regulations.gov (Docket No. WHD-2026-0001). Once comments are closed, the DOL will review and consider those comments, make any final modifications, and publish the final rule.   

As always, as we learn more about this proposed rule and any final rule, we will keep you up to date.

Data centers are Ohio’s newest land use controversy.  With concerns ranging from water use to electricity prices to loss of farmland, the rapid onset of data center development has generated many questions and conflicts across the state.  In response, members of the Ohio legislature have introduced several bills on data center development, and we should see a few more bills introduced soon.  Here’s a review of recently introduced legislation.

Data Center Study Commission.  The first bill is H.B. 646, which would require formation of a Data Center Study Commission to study data center impacts in Ohio.  We explained H.B. 646 in an earlier post.  The bill had its first hearing before the House Technology and Innovation Committee on February 17, where the sponsors testified that data center development “introduces complex and immediate challenges” and that “it is both prudent and necessary that we, as policymakers, take the time to fully understand its implications and adopt an informed, integrated approach…”  The bill is already scheduled for a second hearing on February 24, an indication of continued interest in moving the bill forward.

Prohibitions on nondisclosure agreements. A second bill, H.B. 695, doesn’t address data centers directly but instead targets elected local officials who could have knowledge of such developments. The bill would prohibit county commissioners, township trustees, and village mayors and council members from knowingly entering into nondisclosure agreements that prohibit “disclosing, discussing, describing, or commenting on” matters related to official duties.   The bill would make the agreements void and unenforceable and impose civil fines of up to $1,000 on officials who violate the law. Rep. Brian Stewart (R-Ashville), co-sponsor of the bill along with Rep. Adam Bird (R-New Richmond), explains that “in 11 years as a local elected official - dealing with scores of major development projects - I never signed an NDA, and I never would. Secrecy breeds distrust amongst the taxpayers, which is detrimental to economic development efforts.” The bill was referred to the House Local Government Committee on February 18, 2026.

Requirements for data center customers. A bi-partisan bill  introduced on February 17, 2026, by Rep. Tristan Rader (D-Lakewood) and Rep. David Thomas (R-Jefferson) aims to “ensure costs of new infrastructure and grid upgrades needed to serve these facilities are not shifted onto existing Ohio ratepayers.”  H.B. 706 would require long-term service agreements of at least 12 years with electric utilities for data center customers, require the Public Utilities Commission to create standards for interconnection practices, load study deposits, and milestone requirements. It would also prohibit utilities from recovering data center costs from other customer classes, set minimum gilling standards, and require financial assurance prior to facility construction. 

Democrats in the legislature suggest that several additional data center bills are under development.  Proposals we still might see include granting local governments the authority to reject proposed data center projects, eliminating the sales tax exemption for data centers, requiring facilities to cover costs for additional power generation or transmission, and establishing water consumption limits, reporting, and investments in water infrastructure.  Keep an eye on the Ohio Ag Law Blog for continued updates on data center legislation in Ohio.

The well-known advantages of business entities include liability protection, tax management, and shared management responsibilities. A lesser-known advantage is the relative ease of transferring ownership. When assets such as land, machinery, or livestock are held in an entity like an LLC, ownership interests in the entity can often be transferred far more efficiently than transferring each asset individually. Rather than retitling deeds, updating equipment titles, or reassigning livestock ownership, a transfer of membership interests can effectively shift ownership of all underlying assets in a single step.

Funding the LLC

The first step is to form the LLC and transfer the assets into it. Land is conveyed by deed, titled vehicles by title transfer, and untitled assets such as machinery and livestock by written assignment. This step is critical. Until the LLC is established and owns the assets, there is no entity ownership interest to transfer.

Transferring Ownership

Once the LLC is established and the assets are transferred to it, ownership interests can be transferred with relatively simple documentation. The transfer document should identify the current owner, the recipient, the percentage or units being transferred, the purchase price or value of the gift, and the effective date of the transfer. Both parties should sign and date the document. 

Documenting Value

While the transfer of ownership is relatively simple, it is important to document the value of the ownership being transferred.  If the transfer is a sale, the value will determine the amount of taxes that may be owed.  If the transfer is a gift, the value will determine if the transfer impacts the federal estate tax exemption. 

The value of a gifted ownership interest is its fair market value. That value should be supported by an appraisal or reliable market data. If the gift is undervalued, the IRS can adjust it to fair market value, potentially creating adverse tax consequences. While it may be tempting to rely on county auditor values or informal estimates for land, the better practice is to obtain a qualified appraisal. Although an appraisal adds expense, it is often a worthwhile investment to reduce the risk of problems in an IRS audit.

Example

Consider the following example to illustrate gifting through a business entity.

Farmer owns a farm and would like to gift it to Daughter. To minimize potential estate tax concerns, Farmer plans to make annual gifts over ten years, keeping each gift within the annual exclusion amount. Without using a business entity, Farmer would need to execute and record a new deed each year to transfer the annual interest in the property.

If the farm is first transferred to an LLC, however, each annual gift can be completed by transferring membership interests in the LLC through a simple written assignment. This approach avoids repeated deed preparation and recording. In addition, transfers of LLC interests are private transactions, while deeds are recorded and become public record.

 

As this example illustrates, using a business entity can make ownership transfers relatively simple. For farm and business owners considering a sale or gift of ownership, it may be worthwhile to explore whether establishing an entity would facilitate the transition. Because ownership transfers can carry significant tax and legal implications, legal and tax advisors should be involved in the planning process.

Note: for a thorough discussion on the tax implications of gifting, see the Gifting Assets Prior to Death bulletin available at farmoffice.osu.edu.