[Congressional Record Volume 151, Number 71 (Wednesday, May 25, 2005)]
[Senate]
[Pages S5927-S5928]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD:
  S. 1118. A bill to amend the Reclamation Reform Act of 1982 to reduce 
irrigation subsidies, and for other purposes; to the Committee on 
Energy and Natural Resources.
  Mr. FEINGOLD. Mr. President, today I am introducing a measure aimed 
at curbing wasteful spending. In the face of our ever growing Federal 
deficit, we must prioritize and eliminate programs that can no longer 
be sustained with limited Federal dollars, or where a more cost-
effective means of fulfilling those functions can be substituted. The 
measure that I introduce today establishes a means test for large 
agribusinesses receiving subsidized water from the Bureau of 
Reclamation.
  The irrigation means test provision is drawn from legislation that I 
have sponsored in previous Congresses to reduce the amount of Federal 
irrigation subsidies received by large agribusiness interests. I 
believe that reforming Federal water pricing policy by reducing 
subsidies is important as a means to achieve our broader objectives of 
achieving a truly balanced budget. This legislation is also needed to 
curb 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 of 1902, 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. 
According to a 1996 General Accounting Office report, since the passage 
of the Reclamation Act, the Federal Government has spent $21.8 billion 
to construct 133 water projects in the west to provide water for 
irrigation. Agribusinesses, and other project beneficiaries, are 
required under the law to repay to the Federal Government their 
allocated share of the costs of constructing these projects.
  As a result of the subsidized financing provided by the Federal 
Government, however, some of the beneficiaries of Federal water 
projects repay considerably less than their full share of these costs. 
According to the 1996 GAO report, agribusinesses generally receive the 
largest amount of federal financial assistance. Since the initiation of 
the irrigation program in 1902, construction costs associated with 
irrigation have been repaid without interest. The GAO further found, in 
reviewing the Bureau of Reclamation's financial reports, that $16.9 
billion, or 78 percent, of the $21.8 billion of Federal investment in 
water projects is considered to be reimbursable. Of the reimbursable 
costs, the largest share, $7.1 billion, is allocated to irrigation 
interests. GAO also found that the Bureau of Reclamation will likely 
shift $3.4 billion of the debt owed by agribusinesses to other users of 
the water projects for repayment.
  There are several reasons why large agribusinesses continue to 
receive such significant subsidies. Under the Reclamation Reform Act of 
1982, Congress acted to expand the size of the farms that could receive 
subsidized water from 160 acres to 960 acres. The RRA of 1982 expressly 
prohibits farms that 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.
  The Department of the Interior has acknowledged that these trusts 
exist. Interior published a final rulemaking in 1998 to require farm 
operators who provide services to more than 960 nonexempt acres 
westwide, held by a single trust or legal entity or any combination of 
trusts and legal entities, to submit RRA forms to the district(s) where 
such land is located. Water districts are now required to provide 
specific information about farm operators to Interior annually. This 
information is an important step toward enforcing the legislation that 
I am reintroducing today.
  A recent report by the Environmental Working Group examined water

[[Page S5928]]

subsidies in the Central Valley Project (CVP) of California and it 
provides further evidence that this legislation is long overdue. 
According to EWG, in 2002, the largest 10 percent of the farms in the 
area got 67 percent of the water, for an average subsidy worth up to 
$349,000 each at market rates for replacement water. Twenty-seven large 
farms received subsidies each worth $1 million or more at market rates. 
Yet, the median subsidy for a Central Valley farmer in 2002 was $7,076 
a year, almost 50 times less than the largest 10 percent of farms. One 
farm in Fresno County received more water by itself than 70 CVP water 
user districts. Its subsidy alone was worth $4.2 million a year at 
market rates.
  This analysis is significant because the Bureau of Reclamation 
program is supposed to help small farmers, not large agribusinesses. 
The CVP analysis is also important because CVP farmers get about one-
fifth of all the water used in California, at rates that by any measure 
are far below market value. In 2002, for example, the average price for 
irrigation water from the CVP was less than 2 percent what Los Angeles 
residents pay for drinking water, one-tenth the estimated cost of 
replacement water supplies, and about one-eighth what the public pays 
to buy its own water back to restore the San Francisco Bay and Delta. 
Meanwhile, many citizens in living in the CVP do not have access to 
clean, safe drinking water. Unfortunately, this situation is pervasive 
in many other Western communities.
  My legislation combines various elements of proposals introduced 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 that claimed $500,000 or more in gross 
income, as reported on its 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, a ratio of $500,000, the means-test value, 
divided by its 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 featured in the 2000 Green Scissors 
report. This report is compiled annually by Friends of the Earth and 
Taxpayers for Common Sense and supported by a number of environmental, 
consumer and taxpayer groups. The premise of the report is that there 
are a number of subsidies and projects that could be cut to both reduce 
the deficit and benefit the environment. 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 between 
$440 million and $1.1 billion per year, or at least $2.2 billion over 5 
years.
  When countless Federal programs 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, particularly in tight 
budgetary times.
  I urge Congress to act swiftly to save money for the taxpayers.
                                 ______