Water Subsidies:

Basic Changes Needed to Avoid Abuse of the 960-Acre Limit

RCED-90-6: Published: Oct 12, 1989. Publicly Released: Nov 7, 1989.

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Pursuant to a congressional request, GAO reviewed the Bureau of Reclamation's implementation of the Reclamation Reform Act of 1982, which set a 960-acre limit on farm land eligible to receive federally subsidized water for irrigation purposes.

GAO found that, although the act's legislative history clearly showed congressional intent to provide federally subsidized water to a maximum of 960 acres of owned or leased land being operated collectively as one farm, the act: (1) did not actually address leased acreage; (2) used the term landholding instead of the terms farm or farming operation; and (3) did not address whether farmers could operate multiple landholdings as one farm while separately qualifying landholdings for federally subsidized water. GAO also found that: (1) in response to the act, some farmers reorganized their farms into multiple, smaller landholdings that were individually eligible to receive federally subsidized water, although they continued to operate the landholdings collectively as a farm; (2) farmers reorganized their landholdings through partnerships, corporations, and trusts; (3) such landholding reorganizations reduced the federal government's 1987 revenues by $1.3 million; and (4) although Congress amended the act in 1987 to require the Department of the Interior to audit individual or legal entities whose landholdings or farming operations exceeded 960 acres, farmers' reorganizations of their landholdings complied with the regulations.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congressional committees in the current Congress do not currently have plans to introduce legislation to amend reclamation law and incorporate the recommendations. The recommendation has been open for over 5 years.

    Matter: If federally subsidized water to a given farm, farming operation, or landholding is to be limited to no more than 960 acres of leased or owned land, Congress should amend the Reclamation Reform Act of 1982 to apply the act's acreage limits to farms and farming operations as well as to individual landholdings. Specifically, Congress should amend section: (1) 202 to add a definition of farm or farm operations as follows: "The term "farm" or "farm operation" means any landholding or group of landholdings farmed or operated as a unit by an individual, group, entity, trust, or any other combination or arrangement. The existence of a farm or farm operation will be presumed, subject to contrary evidence, when ownership, operation, management, financing, or other factors, individually or together, indicate that one or more landholdings are farmed or operated as a unit"; (2) 203 to include a farm or farm operation in the 960-acre limit now applicable only to a landholding; (3) 205 to include a farm or farm operation in the pricing provisions now applicable only to a landholding; (4) 214 so that the ownership and pricing limitations of reclamation law will apply to a farm or farm operation operated by or for a trustee for one or more beneficiaries; and (5) 228 to require reporting by a farm or farm operation.

 

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