How is the 50% farm-income rule for South Carolina's Working Farmland Protection Fund measured?
Official title
Opinion addressing eligibility requirements for trust fund recipients under the Working Farmland Protection Fund, S.C. Code, Section 48-59-150.
Requester
Requested by Sterling M. Busbee, Esquire, on behalf of the South Carolina Conservation Bank.
Plain-English summary
The South Carolina Conservation Bank, through its lawyer, asked the Attorney General to clarify how to measure the income test for grants from the Working Farmland Protection Fund. The Fund, under § 48-59-150, can only award grants to buy interests in farmland "in which a landowner derives at least fifty percent of his income." The Bank's practical question: if a farmer owns several parcels, does each parcel have to clear the fifty-percent bar on its own, or do you add up all the farming income across the owner's whole operation? The Bank's example was a farmer with four parcels at $50,000 each plus a $50,000 part-time job: no single parcel is half his income, but farming overall is.
The office sided with the whole-operation reading. The fifty-percent threshold in § 48-59-150(B) applies to a landowner's total farmland holdings, not to each parcel separately. The reasoning is textual. The statute defines "farmland" (§ 48-59-30) by its productive use, "land used for the production of food, fiber, or other agricultural products," and never uses the words "parcel" or "tract." Since the statute talks about farmland in terms of use and the owner's income rather than individual lots, the office concluded it is reasonable to look at the lands collectively.
The office added a second point. Because the Fund's stated purpose is to protect working farmland kept available to commercial agriculture, and because the grant criteria in § 48-59-150(C)(1) expressly consider a landowner's authority to lease or transfer the protected property to other farmers, a court would likely find the Legislature meant to count income from both the owner's own farming and income from leasing the land to other farmers when applying the fifty-percent test.
The office did not take a position on the Bank's separate request to confirm that IRS definitions and Schedule F of Form 1040 control what counts as "farming income." Its opinion is confined to the aggregation question and the inclusion of lease income.
What this means for you
The South Carolina Conservation Bank: The opinion supports administering the fifty-percent income test on a whole-operation basis. A landowner who derives at least half of his income from farming across all his holdings can qualify as an eligible trust fund recipient even if no single parcel would meet the threshold alone, and lease income from renting farmland to other farmers can count toward the test.
Farmers and landowners seeking grants: Under this reading, you look at your overall farming income, not each tract in isolation, when judging whether you meet the fifty-percent requirement. Income you earn by leasing your farmland to another farmer is treated as farming income for this purpose.
Land-conservation lawyers and advisors: The opinion is expressly a matter of first impression interpreting § 48-59-150 and is the office's prediction of how a court would read it, not a binding ruling. Note that it did not adopt the Bank's proposed reliance on IRS Schedule F definitions; that question was left open.
Common questions
Does each of my farm parcels have to produce half my income to qualify?
No, under this opinion. The office read the fifty-percent income test to apply to your total farmland holdings together, not parcel by parcel.
I rent some of my farmland to another farmer. Does that rent count as farming income?
The opinion concludes a court would likely count lease income toward the fifty-percent threshold, because the Fund's purpose is to keep working farmland in agricultural use and the grant criteria specifically contemplate leasing to other farmers.
Did the Attorney General confirm that IRS rules define "farming income" here?
No. The Bank asked for that confirmation, but the opinion did not address it. It answered only how the fifty-percent threshold is measured and that lease income can be included.
Background and statutory framework
The Working Farmland Protection Fund is part of the South Carolina Conservation Bank Act (Chapter 59 of Title 48). Section 48-59-150(B) limits the Fund to grants for purchasing interests in farmland "in which a landowner derives at least fifty percent of his income." Section 48-59-30 defines "farmland" by use rather than by lot or acreage. Subsection (A) states the legislative purpose of providing permanent protection to working farmland essential to the agricultural economy, and subsection (C)(1) lists, among the Bank's grant criteria, the landowner's authority to make the farmland available by lease or transfer to other farmers.
Treating this as a question of first impression, the office applied South Carolina's statutory-construction rules: the goal is to find legislative intent (Mitchell v. City of Greenville), plain text is the best evidence of that intent (Hodges v. Rainey), and a statute must receive a practical, reasonable interpretation consistent with the lawmakers' purpose (State v. Henkel). From the statute's use-based definition of farmland and its protective purpose, the office derived both conclusions: aggregate the owner's holdings, and count lease income.
Source
- Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-addressing-eligibility-requirements-for-trust-fund-recipients-under-the-working-farmland-protection-fund-s-c-code-section-48-59-150/
- Original PDF: https://www.scag.gov/media/hphjtjyj/busbees-os-10956-final-opinion-9-12-2024-pdf.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.
ALAN WILSON
ATTORNEY GENERAL
September 12, 2024
Sterling M. Busbee, Esq.
Haynesworth Sinkler Boyd, P.A.
Post Office Box 340
Charleston, SC 29402
Dear Ms. Busbee:
Attorney General Alan Wilson has referred your letter to the Opinions section. Your letter
states the following:
On behalf of the South Carolina Conservation Bank (the “Bank”), we
request additional guidance and confirmation regarding administration of The
Working Farmland Protection Fund. S.C. Code Ann. § 48-59-150 (“the Act”).
It is our understanding the qualifications for an “eligible trust fund
recipient” are intended to follow the same definitions and qualifications as the
Internal Revenue Service for purposes of defining farming income to calculate the
fifty-percent derivation requirement. Please confirm that all income from farming
reported on Schedule F of a taxpayer’s Form 1040, including amounts received
from cultivating, operating or managing a farm for gain or profit, as an owner or
tenant, may be included as income derived from farmland.
Additionally, please confirm the phrase “interests in farmland in which a
landowner derives at least fifty percent of his income,” as used in Subsection (B)
of the Act, is intended to be broadly construed. It is our understanding the intent of
the Act is to preserve properties actively engaged in the business of farming. It is
our interpretation that if a landowner owns or otherwise uses multiple parcels for
farming operations, the fifty-percent income threshold does not apply to each parcel
individually, but rather applies to the landowner’s operations as a whole.
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Sterling M. Busbee, Esq.
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September 12, 2024
For example, an individual (“Farmer A”) owns or leases four separate
parcels of farmland, each generating $50,000 in income per year. Farmer A
additionally makes $50,000 per year working a part-time job. Farmer A would not
qualify as an eligible trust fund recipient regarding any one of the separate parcels,
but does derive at least fifty percent of his income for the year from farming. It is
our interpretation and understanding, that the intent of the Act is to include Farmer
A, and similarly situated persons, as “eligible trust fund recipients.”
Law/Analysis
It is this Office’s opinion that the income requirement in South Carolina Code § 48-59-
150(B) should be interpreted to apply to a landowner’s total farmland holdings to determine
whether the income percentage threshold is satisfied, rather than considering each parcel
separately. As a matter for first impression, this opinion will interpret section 48-59-150 according
to the rules of statutory construction. When interpreting a statute, the primary goal is to determine
the General Assembly’s intent. See Mitchell v. City of Greenville, 411 S.C. 632, 634, 770 S.E.2d
391, 392 (2015) (“The cardinal rule of statutory interpretation is to ascertain and effectuate the
legislative intent whenever possible.”). Where a statute’s language is plain and unambiguous, “the
text of a statute is considered the best evidence of the legislative intent or will.” Hodges v. Rainey,
341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000). Further, “[a] statute as a whole must receive a
practical, reasonable and fair interpretation consonant with the purpose, design, and policy of
lawmakers.” State v. Henkel, 413 S.C. 9, 14, 774 S.E.2d 458, 461 (2015), reh'g denied (Aug. 5,
2015). With these principles in mind, this opinion will next look to specific provisions within the
text of section 48-59-150 to guide its analysis.
Subsection (B) states, “The Working Farmland Protection Fund must be used by the bank
only for the purpose of awarding grants to eligible trust fund recipients for the purchase of interests
in farmland in which a landowner derives at least fifty percent of his income.” Id. (emphasis
added). Initially, we note that “farmland” is a statutorily defined term within Chapter 59 of Title
48 for all statutes related to the South Carolina Conservation Bank Act. “Farmland” is defined to
mean “land used for the production of food, fiber, or other agricultural products.” S.C. Code § 48-
59-30. Neither this definition nor the plain language of subsection (B) use the terminology
“parcel” or “tract” in reference to farmland. Rather, farmland is described in relation to its
productive use and a landowner’s income. Therefore, if a landowner owns farmland and derives
income therefrom, it would be reasonable to interpret the statute to consider those lands
collectively when determining whether the threshold income percentage is satisfied.
The express purpose of the Legislature in establishing the Fund was to “provid[e]
permanent protection to working farmland properties whose continued availability to commercial
agricultural businesses is essential to the long-term future of the economic sector.” S.C. Code §
Sterling M. Busbee, Esq.
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September 12, 2024
48-59-150(A). Moreover, the criteria the Bank is directed to employ when evaluating applications
for grants from the Fund include consideration of the landowner’s authority to “to make the subject
farmland available via lease or transfer of the protected property to another farmer or other
farmers.” S.C. Code § 48-59-150(C)(1). Given the purpose of protecting working farmland and
that the listed criteria expressly contemplate a landowner’s authority to lease to other farmers, it is
this Office’s opinion that a court would likely find legislative intent to include income derived
from farmland through direct operations of the landowner as well as income derived through
leasing the property to another famer or farmers within the calculation to determine the threshold
income percentage.
Conclusion
As is discussed more fully above, it is this Office’s opinion that the income requirement in
South Carolina Code § 48-59-150(B) should be interpreted to apply to a landowner’s total
farmland holdings to determine whether the income percentage threshold is satisfied, rather than
considering each parcel separately. Further, it is this Office’s opinion that a court would likely
find legislative intent to include income derived from farmland through direct operations of the
landowner as well as income derived through leasing the property to another famer or farmers
within the calculation to determine the threshold income percentage.
Sincerely,
Ny if Pe
Matthew Houck
Assistant Attorney General
REVIEWED AND APPROVED BY:
Robert D. Cook
Solicitor General