In 1986, when several big farmers made news for cashing government checks of $1 million a year or more, public outrage forced Congress to rein in runaway subsidy payments.

"That was considered excessive even by us in the South who represented those rural areas," recalled Jerry Huckaby, then a congressman from Louisiana.

A year later, Congress imposed a new limit on subsidy payments. But Washington soon watered down the reforms and hatched costly new subsidies, all but obliterating that cap.

Today, the program has become a virtual horn of plenty, inviting farmers to take advantage of vague eligibility rules and loose enforcement to maximize government payments. Farms that hit subsidy limits can reorganize to collect two or three times more in tax-funded subsidies.

The porous and poorly enforced limits are one reason why government payments to farmers have jumped more than fourfold in the past 25 years. Last year, subsidies cost $23 billion, almost all from taxes -- the equivalent of 7 percent of the federal budget deficit.

Payment limit abuse is a particular problem in Georgia and other cotton-growing states. Cotton costs more to grow than most other crops and generates higher subsidies, pushing more farmers up against the legal limits.

"If I had to guess, I'd say 20 percent [of subsidy recipients] are taking advantage of the system," said Tommy Weldon, a senior U.S. Department of Agriculture regulator in Georgia. "I've become very cynical."

Payments viewed as excessive in 1986 are now routine. At least 195 U.S. farming operations, including nine in Georgia, got more than $1 million in tax-supported subsidies in 2005.

Total paid to these 195 recipients: $353 million. The biggest check: $15.8 million to Riceland Foods of Arkansas, a cooperative of 9,000 rice farmers.

Circumventing limits -- $180,000 for an individual -- results in higher payouts to larger growers, who can use the payments to leverage bigger loans to grow more crops. But smaller growers are placed at a competitive disadvantage by a program once intended to keep them from losing their land.

Most American farmers never bump into subsidy limits because their acreage and crop yields, which are used to calculate payments, are too small. But for larger growers farming several thousand acres, working the system has become a standard practice, complete with its own folksy vernacular.

Failing to collect all possible subsidies is commonly called "leaving money on the table." Smart legal advice can help any farmer sweep the table clean.

Many growers legally create companies designed solely to maximize their take from taxpayers, exploiting complicated USDA regulations sanctioned by Congress.

Some of these companies exist only on paper. They own no land, no equipment, not even a telephone.

A grower is entitled to a combined maximum of $180,000 from the three major subsidy programs. But a farmer who sets up two of these companies, a process that can take a day, can qualify for up to $360,000 in subsidies. If the grower forms a partnership with relatives or others who are deemed active farmers, the operation can qualify for $1 million or more, even if it's not farming significantly more land.

Time and again, Georgia farmers complained to The Atlanta Journal-Constitution that the temptation to circumvent payment limits thrust them into an uncomfortable moral dilemma.

"It makes farmers feel like they are doing something illegal," said Tim Shirah, a fourth-generation farmer from Mitchell County. "You are going to use the law to circumvent these limits. You don't want to do it, but you do it out of necessity."

Growers bend -- and sometimes break -- the rules when they claim others as active farming partners who contribute little that would warrant more subsidies.

Last year, the USDA found a Coffee County farmer had evaded payment limits by claiming that his three children -- including a daughter raising a 2-year-old in Florida -- were farming with him. The USDA ordered the family to repay $1.7 million in subsidies.

The Government Accountability Office, the investigative arm of Congress, has focused repeatedly in recent years on the USDA's inability to prevent subsidy recipients from circumventing payment limits.

GAO officials say they're now investigating whether wealthy farmers skirt an income cap that disqualifies applicants with adjusted gross incomes of more than $2.5 million, unless at least 75 percent of their income comes from farming. The GAO is also examining possible abuse in payments to deceased farmers' families.

Recent efforts to lower the payment limits have failed, due in part to Sen. Saxby Chambliss (R-Ga.), chairman of the Senate Agriculture Committee, and other farm state members.

"The people who produce are the ones who should be getting the help," said Rep. Sanford Bishop (D-Ga.), who opposes lowering payment limits. "To the extent that they expose themselves to risk and they produce more, they should have corresponding additional assistance."

Sen. Charles Grassley (R-Iowa), who favors tighter limits, said subsidies should be directed to small- and medium-sized farmers who need the help.

"The farm program wasn't set up to help people get rich," Grassley said.

'It's just survival'

Vann Irvin never worried about payment limits in 1980, when he farmed 50 acres of peanuts in southwest Georgia's Baker County. But that changed in the mid-1990s as he rode cotton's revival. He rented more land in surrounding counties, becoming eligible for more subsidies.

After Irvin's father died, his mother joined his operation and began collecting subsidies in 1998.

Patricia Irvin, who runs a school cafeteria in Newton, said she leaves the fieldwork to her son, but helps out with farm operations. "I run the errands ... pick up the parts, that kind of stuff," she said.

By 2002 mother and son had formed a new company, Irvin Farms, that qualified for more subsidies. "We just had to reorganize," Vann Irvin said.

From 1995 to 1998, when Irvin was farming an average of 1,075 acres, his subsidies averaged about $80,760 a year, including payments to his father's estate.

The Irvins expanded in 1999 and farmed about three times as much acreage over the next four years. They collected an average of $578,000 a year in that time, seven times as much as before.

The family's subsidy average climbed to $699,000 for 2003 and 2004 after Vann Irvin's nephew, Matthew Roach, joined the operation in 2003 and Irvin added 800 acres to his holdings. Roach, 21, is a full-time forestry student at the University of Georgia.

In 2005, Irvin formed a new partnership with his mother, Roach, Irvin Farms and another new company owned by Irvin and his nephew.

Under USDA rules, MVP Farms is considered five "persons," each having a subsidy limit of $180,000, for a total of $900,000. Last year the partnership and its members collected $800,867.

In an interview, Irvin acknowledged forming the partnership because payment limits prevented him from collecting all the subsidies that he could.

"It was a pretty good sum," said Irvin. He would not specify the amount.

Irvin portrayed his reorganizations as routine business decisions.

"It's just survival," he said.

The USDA requires farming partners to be "actively engaged" in the farming operation, contributing not only money but also labor or management commensurate with their share of the enterprise.

Irvin acknowledged that making his college-age nephew a partner could raise questions for regulators because Roach, who lives in Athens, a 5 1/2-hour drive away, wasn't involved in the day-to-day running of the farm.

Irvin said Roach shoulders some of the operation's financial risks and works on the farm during the summer. "He helps out when he can," Irvin said.

Roach did not respond to e-mail requests for comment.

USDA rules are so vague that a savvy lawyer could argue a full-time agricultural student was "actively engaged," said Weldon, the payment limitation specialist in Georgia for the USDA's Farm Service Agency.

In 2004, the GAO complained that the FSA interpreted eligibility rules so loosely that someone could satisfy the management standard by making just a few phone calls a year.

Indeed, someone "living on Fifth Avenue in New York" can qualify for subsidies by making a 15-minute phone call to secure credit for a farm, said Christopher Kelley, a University of Arkansas law professor and expert on payment limitations. "You can stay in your bathrobe if you've got a telephone line to Bank of America."

As a result, thousands of people collect subsidies for cropland that's hundreds of miles from their homes.

Government auditors urged the USDA to close the loophole by establishing concrete guidelines to measure "active" management. The USDA declined in 2004, saying current regulations were "consistent with the intent of Congress."

Payments to a prince

American taxpayers can thank the crown prince of Liechtenstein for payment limits, and Congress for undercutting them almost immediately.

In 1986, news reports disclosed that the European prince had collected $2.2 million in cotton and rice subsidies. Since the 1970s, federal law had capped subsidies at $50,000 a year, but farmers could create a limitless number of businesses that could each receive a subsidy.

Newspaper editorials from coast to coast railed against the payments to the prince. Urban members of Congress believed they had the votes to set tighter payment limits for farmers.

Meanwhile, cotton and rice farmers said a fairer limit would be $100,000. But raising the limit was politically untenable at the time, said William Penn, a Michigan lawyer who was then a senior USDA official.

In 1987, Congress left the $50,000 limit intact but created the so-called "three-entity" rule. Under this provision, a farmer could collect $50,000 in subsidies in his own name, and, as half-owner, up to $25,000 for each of two other entities.

"Raising the limits would have been more honest," said Penn. "But as you know, politics is not always honest."

Budget officials originally projected that the three-entity rule would reduce subsidies by $215 million in the first two years. But, after Congress allowed farm operations to add members so they could continue getting the same amounts, the actual savings amounted to just $3.4 million.

Since then, new subsidy programs and new laws added by Congress have exploded the 1987 limits:

* Commodity certificates have cost taxpayers $5.7 billion since 1999. Government marketing loan programs pay a farmer the difference between the amount of the loan and the market value of his crop, up to $75,000. Commodity certificates allow a farmer to keep amounts over the $75,000 limit.

* Countercyclical payments, with a limit of $65,000, have cost $7.7 billion since 2002. The payments compensate farmers when the price for a crop falls below a target set by Congress.

* Peanut subsidies, created in 2002 with a limit that is separate from other crops, have cost $857 million, not including the cost of buying out old peanut quotas that guaranteed farmers a higher-than-market price.

The result is that the $100,000 limit of 1987 can reach $720,000 for a farmer who grows both cotton and peanuts, as is typical in South Georgia. And these amounts don't include payments for conservation and disaster relief, which have their own limits.

"We have no limits today," said Chuck Hassebrook, head of the Center for Rural Affairs in Lyons, Neb.

Enforcement 'monster'

The 1987 law triggered a surge of new farm entities created to take advantage of the new rules, and spawned a cottage industry of lawyers and accountants to show farmers how.

In Albany, attorney Allen Olson can plug subsidy payments into a formula to show a prospective client exactly how much money he's "leaving on the table" because of limits.

Olson can also advise a farmer just how many companies and partners he needs to increase his farm's limits, advice he calls "payment limitations planning." The advice can cost several thousand dollars and typically requires a farmer to incorporate new farming entities and business structures.

"I tell people that unless they are leaving $30,000 on the table, it doesn't make sense to do any planning," Olson said.

Olson said the ideal business structure is a general partnership composed of individuals and limited liability companies, each of which is half-owned by one of the members.

A six-member partnership -- with three people and three limited liability companies -- could qualify for up to $1.08 million in subsidies, or $2.16 million if farming both cotton and peanuts. It could qualify for even more by using commodity certificates.

From his government office in Athens, Tommy Weldon must determine whether such operations are playing by the rules.

In complicated cases, Weldon must peel back layers of overlapping financial relationships, verify loan arrangements and accept, often at face value, representations about labor and management contributions.

"It's basically a monster," said Weldon. "It's very difficult for us to administer such a complicated program."

Each year, a Farm Service Agency computer spits out the names of thousands of large farming operations that state offices are asked to examine for compliance with payment limitation provisions.

In Georgia, Weldon assembles FSA teams to do the reviews. Complicated reviews take months, he said, and often exceed the technical expertise and training of his staff. Limited staffing is also a factor, he said.

In 2004, the GAO found that the FSA completed only one-third of 1,500 requested reviews, a level of oversight that failed to ensure the integrity of the programs. Nearly 500 reviews hadn't even begun after two years, the GAO found.

During the GAO audit, the FSA increased the number of reviews. In Georgia, staff performed 43 reviews in 2003, several of which found farm operations out of compliance and led to the recovery of taxpayer money.

But the time and effort "about killed us," Weldon said.

Since then, the number of reviews has fallen to previous levels of about 16 per year. "It's a more manageable number," Weldon said.

Congressional battlefield

The federal budget deficit and lobbying from free-trade advocates will pressure Congress to rein in subsidies and tighten payment limits when the farm bill comes up for renewal next year. Recent efforts, however, have failed in the face of strong opposition from farm state legislators.

President Bush, both this year and last year, proposed a hard cap of $250,000, junking the three-entity rule and ending the payment limit exemption on commodity certificates.

Chambliss, who has blocked efforts to lower payment limits while the 2002 farm bill remains in effect, is noncommittal about the prospect for changes.

"I can't sit here today and say $250,000 is the right number or $380,000 is the right number," Chambliss said in an interview. "But we know it's going to be under attack."

He has indicated his support for the three-entity rule. "Some farmers have abused it," he said. "But it's a very, very minimal number of farmers who've abused that rule."

Some farm advocates want Congress to tighten the laws that permit people living off the farm to collect subsidies. They believe lax enforcement of eligibility rules gives large farms a competitive edge over smaller ones. Even larger growers worry that too much aid is flowing to absentee landowners, siphoning money away from bona fide farmers.

"We need meaningful rules on what it means to be a farmer," said Hassebrook of the Center for Rural Affairs. "Until you do that nothing else matters. You'll just create all these phony paper farmers who participate in one phone call a year and ... multiply their payments."

ABOUT THE SERIES

To understand the benefits and drawbacks of American farm subsidies, reporters Dan Chapman and Ken Foskett interviewed more than 200 farmers, economists, government officials and agricultural experts on three continents.