[Congressional Record Volume 142, Number 74 (Thursday, May 23, 1996)]
[Senate]
[Pages S5567-S5571]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEVIN (for himself and Mr. Abraham):
  S. 1797. A bill to revise the requirements for procurement of 
products of Federal Prison Industries to meet needs of Federal 
agencies, and for other purposes; to the Committee on the Judiciary.


      The Federal Prison Industries Competition in Contracting Act

 Mr. LEVIN. Mr. President, I am pleased to introduce, with 
Senator Abraham, the Federal Prison Industries Competition in 
Contracting Act. This bill, if enacted, would eliminate the requirement 
for Federal agencies to purchase products made by Federal Prison 
Industries and require that FPI to compete commercially for Federal 
contracts. It would implement a key recommendation of the Vice 
President's National Performance Review, which concluded that we should 
``Take away the Federal Prison Industries' status as a mandatory source 
of Federal supplies and require it to compete commercially for Federal 
agencies' business.'' Most importantly, it would ensure that the 
taxpayers get the best possible value for their Federal procurement 
dollars.
  Mr. President, the Director of Federal Prison Industries, Mr. Steve 
Schwalb, told me earlier this year that his agency is fully capable of 
competing with private industry for Federal contracts. Indeed, FPI 
would have a significant advantage in any such head-to-head 
competition: FPI pays inmates only $1.35 an hour, less than a third of 
the minimum wage and a small fraction of the wage paid to most private 
sector workers in competing industries.
  The taxpayers already provide a direct subsidy Federal Prison 
Industries products by picking up the cost of feeding, clothing, and 
housing the inmates

[[Page S5568]]

who provide the labor. There is no reason why we should provide an 
indirect subsidy as well, by requiring Federal agencies to purchase 
products from FPI even when they are more expensive and of a lower 
quality than competing commercial items.
  Despite Mr. Schwalb's statement that Federal Prison Industries is 
capable of competing with the private sector, FPI remains unwilling to 
do so. The reason is obvious: it is much easier to gain market share by 
fiat than it is to compete for business. Under current law, FPI need 
not offer the best product at the best price; it is sufficient for it 
to offer an adequate product at an adequate price, and insist upon its 
right to make the sale. Indeed, FPI currently advertises that it offers 
Federal agencies ``ease in purchasing'' through ``a procurement with no 
bidding necessary.'' The result of the FPI's status as a mandatory 
source is not unlike the result of other sole-source contracting: the 
taxpayers frequently pay too much and receive an inferior product for 
their money.
  Mr. President, I do not consider myself to be an enemy of Federal 
Prison Industries. I am a strong supporter of the idea of putting 
Federal inmates to work. I understand that a strong prison work program 
not only reduces inmate idleness and prison disruption, but can also 
help build a work ethic, provide job skills, and enable prisoners to 
return to product society upon their release.
  However, I believe that prison work must be conducted in a manner 
that is sensitive to the need not to unfairly eliminate the jobs of 
hard-working citizens who have not committed crimes. FPI will be able 
to achieve this result only if it diversifies its product lines and 
avoids the temptation to build its work force by continuing to displace 
private sector jobs in its traditional lines of work. For this reason, 
I have been working since 1990 to try to help Federal Prison Industries 
to identify new markets that it can expand into without displacing 
private sector jobs. I had hoped.
  In 1990, the House Appropriations Committee requested a study to 
identify new opportunities for FPI to meet its growth requirements, 
assess FPI's impact on private sector businesses and labor, and 
evaluate the need for changes to FPI's laws and mandates. That study, 
conducted by Deloitte & Touche, concluded that FPI should meet its 
growth needs by using new approaches and new markets, not by expanding 
its production in traditional industries. The Deloitte & Touch study 
concluded:

       FPI needs to maintain sales in industries that produce 
     products such as traditional furniture and furnishings, 
     apparel and textile products, and electronic assemblies to 
     maintain inmate employment during the transition.
       These industries should not be expanded, and FPI should 
     limit its market shares to current levels.

  I followed up on that report by meeting with Federal Prison 
Industries officials and participating in a summit process, sponsored 
by the Brookings Institute, designed to develop alternative growth 
strategies for FPI. The summit process resulted in two suggested areas 
for growth: First, entering partnerships with private sector companies 
to replace offshore labor; and second, entering the recycling business 
in areas such as mattresses and electrical motors.
  In January 1994, I urged FPI to move quickly to implement these 
recommendations and develop new markets. At that time, I wrote to 
Kathleen M. Hawk, the Director of the Bureau of Federal Prisons, as 
follows:

       As you know, I am supportive of FPI's role in keeping 
     inmates occupied and teaching them a work ethic and job 
     skills. However, FPI's continued market share growth in the 
     government furniture market has had an unfair and 
     disproportionate impact on that particular sector. In order 
     to take pressure off of such traditional industries where FPI 
     has focused, FPI should cap its market share and diversify 
     its activities away from these traditional industries and 
     into alternative growth strategies.
       I am alarmed that FPI continues to increase its share of 
     government purchases of furniture. The 1991 Deloitte and 
     Touche study recommended that FPI limit its industry market 
     share to current levels in traditional industries. It would 
     be a welcome sign of goodwill in this ``summit'' process if 
     FPI were to cap its market share in the furniture industry 
     while aggressively pursuing acceptable alternative growth 
     strategies.

  Unfortunately, Federal Prison Industries has chosen to take the exact 
opposite course of action. Earlier this year, FPI acted unilaterally to 
virtually double its furniture sales from $70 million to $130 million 
and from 15 percent of the Federal market to 25 percent of the Federal 
market, over the next 5 years. In direct contravention of the Deloitte 
& Touche recommendations, FPI has announced its intention to undertake 
similar market share increases in other traditional product lines, such 
as work clothing and protective clothing.
  In defense of this action FPI contends that it will not place an 
undue burden on the private sector because most firms within the 
industry are not heavily involved in the Federal market.
  Mr. President, Federal Prison Industries cannot have it both ways. If 
they are providing a substantial number of jobs to inmates, then they 
must be displacing a substantial number of jobs in the private sector. 
A substantial increase in FPI's business means a similar decrease in 
U.S. private sector business--unless it is displacing imports, which is 
what FPI should be doing. Instead of diversifying as recommended by the 
Deloitte & Touche study and the Brookings summit, FPI is going back to 
the same well yet again, and taking it out of the hide of the same 
traditional industries.
  Mr. President, this is the easy way out, but it isn't the right way 
for FPI, it isn't the right way for the private sector workers whose 
jobs FPI is taking, and it isn't the right way for the taxpayer, who 
will continue to pay more and get less as a result of the mandatory 
preference for FPI goods. We need to have jobs for prisoners, but can 
no longer afford to allow FPI to designate whose jobs it will take, and 
when it will take them. Competition will be better for FPI, better for 
the taxpayer, and better for working men and women around the 
country.
  Mr. ABRAHAM. Mr. President, I am very pleased to join with my 
distinguished colleague from Michigan in sponsoring this legislation. I 
think that Federal Prison Industries plays an extremely valuable role 
in giving prisoners something useful to do with their time and helping 
them to develop the self-discipline and other virtues that enable 
people outside of prison to lead productive lives. I am convinced, 
however, that these same goals can be accomplished within the 
parameters set by this legislation. I also see no reason why the law 
abiding owners of small businesses and the workers they employ should 
be deprived of any opportunity to bid for a class of government 
contracts in favor of FPI. Finally, I appreciate Senator Levin's 
acceptance of my suggestion to include section 2, which I believe 
provides useful encouragement to FPI to try to concentrate its 
expansion efforts in the direction of goods that the Government 
presently acquires by importing them.
      By Mr. FEINGOLD:
  S. 1798. A bill to amend the Reclamation Reform Act of 1982 to 
clarify the acreage limitations and incorporate a means test for 
certain farm operations, and for other purposes; to the Committee on 
Agriculture, Nutrition, and Forestry.


              The Irrigation Subsidy Reduction Act of 1996

  Mr. FEINGOLD. Mr. President, I am introducing today a new measure to 
curb the receipt of Federal irrigation subsidies by large agribusiness 
interests. I am introducing legislation in this area as a deficit 
reduction measure because I believe that the Federal Government needs 
to scrutinize carefully all forms of assistance it provides in these 
times of fiscal constraint. I am also prompted to act in this area, Mr. 
President, because the Federal Government has been unable to correct 
fundamental abuses of reclamation law that cost the taxpayer millions 
of dollars every year.
  In 1901, President Theodore Roosevelt proposed legislation, which 
came to be known as the Reclamation Act, to encourage development of 
family farms throughout the western United States. The idea was to 
provide needed water for areas that were otherwise dry and give small 
farms--those no larger than 160 acres--a chance, with a helping hand 
from the Federal Government, to establish themselves.
  Under the Reclamation Reform Act of 1982, Congress acted to expand 
the size of the farms that could receive subsidized water to 960 acres. 
The RRA of 1982 expressly prohibits farms that

[[Page S5569]]

exceed 960 acres in size from receiving Federally-subsidized water. 
These restrictions were added to the Reclamation law to close loopholes 
through which Federal subsidies were flowing to large agribusinesses 
rather than the small family farmers that Reclamation projects were 
designed to serve. Agribusinesses were expected to pay full cost for 
all water received on land in excess of their 960-acre entitlement. 
Despite the express mandate of Congress, regulations promulgated under 
the Reclamation Reform Act of 1982 have failed to keep big agricultural 
water users from receiving Federal subsidies. The General Accounting 
Office and the Inspector General of the Department of the Interior 
continue to find that the acreage limits established in law are 
circumvented through the creation of arrangements such as farming 
trusts. These trusts, which in total acreage well exceed the 960 acre 
limit, are comprised of smaller units that are not subject to the 
reclamation acreage cap. These smaller units are farmed under a single 
management agreement often through a combination of leasing and 
ownership.
  Three years ago, as part of a settlement of a suit with the Natural 
Resources Defense Council, the Bureau of Reclamation agreed to propose 
new regulations under the reclamation program. At the beginning of 
February 1996, the Administration issued its final environmental impact 
statement [EIS] on its proposed regulations. On March 8, 1996 I joined 
with the Senator from New Jersey [Mr. Bradley], the Senator from New 
Hampshire (Mr. Gregg) and others in writing to the President to express 
our concern and disappointment that these new regulations would 
continue to allow the 960-acre loophole to be exploited. Indeed, 
neither the Bureau's ``preferred option'' for the regulation, nor any 
of the alternatives they describe in the EIS, would act to curb 
irrigation water abuses by these agribusiness trusts.
  Last week, I received a response to the letter I joined in sending to 
the Department of the Interior. The letter states, ``Last spring's 
release of a proposed rule making and draft EIS prompted nearly 400 
letters and 8 public hearings on these complex issues during the 
comment period. The FEIS alternative responds to many of the comments 
we received.'' Mr. President, this letter specifically does not respond 
to the concerns that I, the Senator from New Jersey [Mr. Bradley] and 
others raised. Now is the time, in light of the Department's inability 
to correct this problem, to look back to the statute and attempt to 
correct the costly loopholes that it facilitates.
  Presently, according to the Bureau of Reclamation, there are 80 such 
trusts receiving subsidized water on more than 738,000 acres of land, 
or about 10 percent of the land for which the Bureau of Reclamation 
provides water. In a 1989 GAO report, the activities of six of these 
trusts were fully explored. According to GAO, one 12,345 acre cotton 
farm--roughly 20 square miles--operating under a single partnership, 
was reorganized to avoid the 960-acre limitation into 15 separate land 
holdings through 18 partnerships, 24 corporations, and 11 trusts which 
were all operated as one large unit. A seventh very large trust was the 
sole topic of a 1990 GAO report. The Westhaven trust is a 23,238-acre 
farming operation in California's Central Valley. It was formed for the 
benefit of 326 salaried employees of the J.G. Boswell Company. Boswell, 
GAO found, had taken advantage of section 214 of the RRA, which exempts 
from its 960-acre limit land held for beneficiaries by a trustee in a 
fiduciary capacity, as long as no single beneficiary's interest exceeds 
the law's ownership limits. The RRA, as I have mentioned, does not 
preclude multiple land holdings from being operated collectively under 
a trust as one farm while qualifying individually for federally 
subsidized water. Accordingly, the J.G. Boswell Company reorganized 
23,238 acres it held as the Boston Ranch by selling them to the 
Westhaven Trust, with the land holdings attributed to each beneficiary 
being eligible to receive federally subsidized water.

  Before the land was sold to Westhaven Trust, the J.G. Boswell Company 
operated the acreage as one large farm and paid full cost for the 
Federal irrigation water delivered for the 18-month period ending in 
May 1989. When the trust bought the land, due to the loopholes in the 
law, the entire acreage became eligible to receive federally subsidized 
water because the land holdings attributed to the 326 trust 
beneficiaries range from 21 acres to 547 acres--all well under the 960-
acre limit.
  In the six cases the GAO reviewed in 1989, owners or lessees paid a 
total of about $1.3 million less in 1987 for Federal water then they 
would have paid if their collective land holdings were considered as 
large farms subject to the Reclamation Act acreage limits. Had 
Westhaven trust been required to pay full cost, GAO estimated in 1990, 
it would have paid $2 million more for its water. The GAO also found, 
in all seven of these cases, that reduced revenues are likely to 
continue unless Congress amends the Reclamation Act to close the 
loopholes allowing benefits for trusts.
  The legislation that I am introducing combines various elements of 
proposals introduced during previous attempts by other members of 
Congress to close loopholes in the 1982 legislation and to impose a 
$500,000 means test. This new approach limits the amount of subsidized 
irrigation water delivered to any operation in excess of the 960-acre 
limit which claimed $500,000 or more in gross income, as reported on 
their most recent IRS tax form. If the $500,000 threshold were 
exceeded, an income ratio would be used to determine how much of the 
water should be delivered to the user at the full-cost rate, and how 
much at the below-cost rate. For example, if a 961-acre operation 
earned $1 million dollars, a ratio of $500,000 (the means test value) 
divided by their gross income would determine the full cost rate, thus 
the water user would pay the full cost rate on half of their acreage 
and the below cost rate on the remaining half.
  This means testing proposal was profiled in this year's ``Green 
Scissors'' report, written by Friends of the Earth and Taxpayers for 
Common Sense and supported by 21 other environmental and consumer 
groups, including groups like the Concord Coalition, the Progressive 
Policy Institute. The premise of the report is that there are a number 
of subsidies and projects, totaling $39 billion dollars in all, that 
could be cut to both reduce the deficit and benefit the environment. 
This report coalesces what I and many others in the Senate have long 
known, we must be diligent in eliminating practices that can no longer 
be justified in light of our enormous annual deficit and national debt. 
The ``Green Scissors'' recommendation on means testing water subsidies 
indicates that if a test is successful in reducing subsidy payments to 
the highest grossing 10 percent of farms, then the Federal Government 
would recover at least $440 million per year, or at least $2.2 billion 
over 5 years.
  The measure I introduce today is my third legislative effort in the 
area of irrigation subsidies, all of which have been profiled in the 
``Green Scissors'' report. In February of 1995, I introduced two 
related pieces of legislation aimed at reducing double dipping for 
irrigation water subsidies that cost the Federal taxpayers millions of 
dollars each year. I hope that other Members will join me in sponsoring 
these efforts, as elimination of western water subsidies, and a wide 
range of reclamation subsidies, should be pursued as legitimate deficit 
reduction opportunities.
  When countless Federal program are subjected to various types of 
means tests to limit benefits to those who truly need assistance, it 
makes little sense to continue to allow large business interests to dip 
into a program intended to help small entities struggling to survive. 
Taxpayers have legitimate concerns when they learn that their hard-
earned tax dollars are being expended to assist large corporate 
interests in select regions of the country who benefit from these 
loopholes. The Federal Water Program was simply never intended to 
benefit these large interests.
  In conclusion, Mr. President, it is clear that the conflicting 
policies of the Federal Government in this area are in need of reform, 
and if Federal agencies cannot be diligent in curbing this corporate 
welfare administratively, Congress should act. Large agribusinesses 
should not be able to continue to soak the taxpayers. We should act to 
close these loopholes as soon as possible. I ask unanimous consent that

[[Page S5570]]

the text of the measure be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1798

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Irrigation Subsidy Reduction 
     Act of 1996''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) the Federal reclamation program has been in existence 
     for over 90 years, with an estimated taxpayer investment of 
     over $70,000,000,000;
       (2) the program has had and continues to have an enormous 
     effect on the water resources and aquatic environments of the 
     western States;
       (3) irrigation water made available from Federal water 
     projects in the West is a very valuable resource for which 
     there are increasing and competing demands;
       (4) the justification for providing water at less than full 
     cost was to benefit and promote the development of small 
     family farms and exclude large corporate farms, but this 
     purpose has been frustrated over the years due to inadequate 
     implementation of subsidy and acreage limits;
       (5) below-cost water prices tend to encourage excessive use 
     of scarce water supplies in the arid regions of the West, and 
     reasonable price increases to the wealthiest western farmers 
     would provide an economic incentive for greater water 
     conservation;
       (6) the Federal Government has increasingly applied 
     eligibility tests based on income for Federal entitlement and 
     subsidy programs, measures that are consistent with the 
     historic approach of the reclamation program's acreage 
     limitations that seek to limit water subsidies to smaller 
     farms; and
       (7) including a means test based on gross income in the 
     reclamation program will increase the effectiveness of 
     carrying out the family farm goals of the Federal reclamation 
     laws.

     SEC. 3. AMENDMENTS.

       (a) Definitions.--Section 202 of the Reclamation Reform Act 
     of 1982 (43 U.S.C. 390bb) is amended--
       (1) by redesignating paragraphs (7), (8), (9), (10), and 
     (11) as paragraphs (9), (10), (11), (12), and (13), 
     respectively;
       (2) in paragraph (6) by striking ``owned or operated under 
     a lease which'' and inserting ``owned, leased, or operated by 
     an individual or legal entity and which'';
       (3) by inserting after paragraph (6) the following:
       ``(7) Legal entity.--The term `legal entity' includes a 
     corporation, association, partnership, trust, joint tenancy, 
     or tenancy in common, or any other entity that owns, leases, 
     or operates a farm operation for the benefit of more than 1 
     individual under any form of agreement or arrangement.
       ``(8) Operator.--
       ``(A) In general.--The term `operator'--
       ``(i) means an individual or legal entity that operates a 
     single farm operation on a parcel (or parcel) of land that is 
     owned or leased by another person (or persons) under any form 
     of agreement or arrangement (or agreements or arrangements); 
     and
       ``(ii) if the individual or legal entity--

       ``(I) is an employee of an individual or legal entity, 
     includes the individual or legal entity; or
       ``(II) is a legal entity that controls, is controlled by, 
     or is under common control with another legal entity, 
     includes each such other legal entity.

       ``(B) Operation of a farm operation.--For the purposes of 
     subparagraph (A), an individual or legal entity shall be 
     considered to operate a farm operation if the individual or 
     legal entity is the person that performs the greatest 
     proportion of the decisionmaking for and supervision of the 
     agricultural enterprise on land served with irrigation 
     water.''; and
       (4) by adding at the end the following:
       ``(14) Single farm operation.--
       ``(A) In general.--The term `single farm operation' means 
     the total acreage of land served with irrigation water for 
     which an individual or legal entity is the operator.
       ``(B) Rules for determining whether separate parcels are 
     operated as a single farm operation.--
       ``(i) Equipment- and labor-sharing activities.--The conduct 
     of equipment- and labor-sharing activities on separate 
     parcels of land by separate individuals or legal entities 
     shall not by itself serve as a basis for concluding that the 
     farming operations of the individuals or legal entities 
     constitute a single farm operation.
       ``(ii) Performance of certain services.--The performance by 
     an individual or legal entity of an agricultural chemical 
     application, pruning, or harvesting for a farm operation on a 
     parcel of land shall not by itself serve as a basis for 
     concluding that the farm operation on that parcel of land is 
     part of a single farm operation operated by the individual or 
     entity on other parcels of land.''.
       (b) Identification of Owners, Lessees, and Operators and of 
     Single Farm Operations.--The Reclamation Reform Act of 1982 
     (43 U.S.C. 39aa et seq.) is amended by inserting after 
     section 201 the following:

     ``SEC. 201A. IDENTIFICATION OF OWNERS, LESSEES, AND OPERATORS 
                   AND OF SINGLE FARM OPERATIONS.

       ``(a) In General.--Subject to subsection (b), for each 
     parcel of land to which irrigation water is delivered or 
     proposed to be delivered, the Secretary shall identify a 
     single individual or legal entity as the owner, lessee, or 
     operator.
       ``(b) Shared Decisionmaking and Supervision.--If the 
     Secretary determines that no single individual or legal 
     entity is the owner, lessee, or other individual that 
     performs the greatest proportion of decisionmaking for and 
     supervision of the agricultural enterprise on a parcel of 
     land--
       ``(1) all individuals and legal entities that own, lease, 
     or perform a proportion of decisionmaking and supervision 
     that is equal as among themselves but greater than the 
     proportion performed by any other individual or legal entity 
     shall be considered jointly to be the owner, lessee, or 
     operator; and
       ``(2) all parcels of land of which any such individual or 
     legal entity is the owner, lessee, or operator shall be 
     considered to be part of the single farm operation of the 
     owner, lessee, or operator identified under subsection (1).
       (c) Pricing.--Section 205 of the Reclamation Reform Act of 
     1982 (43 U.S.C. 390ee) is amended by adding at the end the 
     following:
       ``(d) Single Farm Operations Generating More Than $500,000 
     in Gross Farm Income.--
       ``(1) In general.--Notwithstanding subsections (a), (b), 
     and (c), in the case of--
       ``(A) a qualified recipient that reports gross farm income 
     from a single farm operation in excess of $500,000 for a 
     taxable year; or
       ``(B) a limited recipient that received irrigation water on 
     or before October 1, 1981, and that reports gross farm income 
     from a single farm operation in excess of $500,000 for a 
     taxable year;

     irrigation water may be delivered to the single farm 
     operation of the qualified recipient or limited recipient at 
     less than full cost to a number of acres that does not exceed 
     the number of acres determined under paragraph (2).
       ``(2) Maximum number of acres to which irrigation water may 
     be delivered at less than full cost.--The number of acres 
     determined under this subparagraph is the number equal to the 
     number of acres of the single farm operation multiplied by a 
     fraction, the numerator of which is $500,000 and the 
     denominator of which is the amount of gross farm income 
     reported by the qualified recipient or limited recipient in 
     the most recent taxable year.
       ``(3) Inflation adjustment.--
       ``(A) In general.--The $500,000 amount under paragraphs (1) 
     and (2) for any taxable year beginning in a calendar year 
     after 1997 shall be equal to the product of--
       ``(i) $500,000, multiplied by
       ``(ii) the inflation adjustment factor for the taxable 
     year.
       ``(B) Inflation adjustment factor.--The term `inflation 
     adjustment factor' means, with respect to any calendar year, 
     a fraction the numerator of which is the GDP implicit price 
     deflator for the preceding calendar year and the denominator 
     of which is the GDP implicit price deflator for 1996. Not 
     later than April 1 of any calendar year, the Secretary shall 
     publish the inflation adjustment factor for the preceding 
     calendar year.
       ``(C) GDP implicit price deflator.--For purposes of 
     subparagraph (B), the term `GDP implicit price deflator' 
     means the first revision of the implicit price deflator for 
     the gross domestic product as computed and published by the 
     Secretary of Commerce.
       ``(D) Rounding.--If any increase determined under 
     subparagraph (A) is not a multiple of $100, the increase 
     shall be rounded to the next lowest multiple of $100.''.
       (d) Certification of Compliance.--Section 206 of the 
     Reclamation Reform Act of 1982 (43 U.S.C. 390ff) is amended 
     to read as follows:

     ``SEC. 206. CERTIFICATION OF COMPLIANCE.

       ``(a) In General.--As a condition to the receipt of 
     irrigation water for land in a district that has a contract 
     described in section 203, each owner, lessee, or operator in 
     the district shall furnish the district, in a form prescribed 
     by the Secretary, a certificate that the owner, lessee, or 
     operator is in compliance with this title, including a 
     statement of the number of acres owned, leased, or operated, 
     the terms of any lease or agreement pertaining to the 
     operation of a farm operation, and, in the case of a lessee 
     or operator, a certification that the rent or other fees paid 
     reflect the reasonable value of the irrigation water to the 
     productivity of the land.
       ``(b) Documentation.--The Secretary may require a lessee or 
     operator to submit for the Secretary's examination--
       ``(1) a complete copy of any lease or other agreement 
     executed by each of the parties to the lease or other 
     agreement; and
       ``(2) a copy of the return of income tax imposed by chapter 
     1 of the Internal Revenue Code of 1986 for any taxable year 
     in which the single farm operation of the lessee or operator 
     received irrigation water at less than full cost.''.
       (e) Trusts.--Section 214 of the Reclamation Reform Act of 
     1982 (43 U.S.C. 390nn) is repealed.
       (f) Administrative Provisions.--
       (1) Penalties.--Section 224(c) of the Reclamation Reform 
     Act of 1982 (43 U.S.C. 390ww(c)) is amended--
       (A) by striking ``(c) The Secretary'' and inserting the 
     following:
       ``(c) Regulations; Data Collection; Penalties.--
       ``(1) Regulations; data collection.--The Secretary''; and

[[Page S5571]]

       (B) by adding at the end the following:
       ``(2) Penalties.--Notwithstanding any other provision of 
     law, the Secretary shall establish appropriate and effective 
     penalties for failure to comply with any provision of this 
     Act or any regulation issued under this Act.''.
       (2) Interest.--Section 224(i) of the Reclamation Reform Act 
     of 1982 (43 U.S.C. 390ww(i)) is amended by striking the last 
     sentence and inserting the following: ``The interest rate 
     applicable to underpayments shall be equal to the rate 
     applicable to expenditures under section 202(3)(C).''.
       (g) Reporting.--Section 228 of the Reclamation Reform Act 
     of 1982 (43 U.S.C. 390zz) is amended by inserting ``operator 
     or'' before ``contracting entity'' each place it appears.
       (h) Memorandum of Understanding.--The Reclamation Reform 
     Act of 1982 (43 U.S.C. 390aa et seq.) is amended--
       (1) by redesignating sections 229 and 230 as sections 230 
     and 231; and
       (2) by inserting after section 228 the following:

     ``SEC. 229. MEMORANDUM OF UNDERSTANDING.

       ``The Secretary, the Secretary of the Treasury, and the 
     Secretary of Agriculture shall enter into a memorandum of 
     understanding or other appropriate instrument to permit the 
     Secretary, notwithstanding section 6103 of the Internal 
     Revenue Code of 1986, to have access to and use of available 
     information collected or maintained by the Department of the 
     Treasury and the Department of Agriculture that would aid 
     enforcement of the ownership and pricing limitations of 
     Federal reclamation law.''.
                                 ______