II

104TH CONGRESS

2D SESSION S. 1798

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.

IN THE SENATE OF THE UNITED STATES

MAY 23, 1996

Mr. FEINGOLD introduced the following bill; which was read twice and

referred to the Committee on Agriculture, Nutrition, and Forestry

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Irrigation Subsidy Re5 duction Act of 1996’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—
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1 (1) the Federal reclamation program has been

2 in existence for over 90 years, with an estimated

3 taxpayer investment of over $70,000,000,000;

4 (2) the program has had and continues to have

5 an enormous effect on the water resources and

6 aquatic environments of the western States;

7 (3) irrigation water made available from Fed8 eral water projects in the West is a very valuable re9 source for which there are increasing and competing

10 demands;

11 (4) the justification for providing water at less

12 than full cost was to benefit and promote the devel13 opment of small family farms and exclude large cor14 porate farms, but this purpose has been frustrated

15 over the years due to inadequate implementation of

16 subsidy and acreage limits;

17 (5) below-cost water prices tend to encourage

18 excessive use of scarce water supplies in the arid re19 gions of the West, and reasonable price increases to

20 the wealthiest western farmers would provide an eco21 nomic incentive for greater water conservation;

22 (6) the Federal Government has increasingly

23 applied eligibility tests based on income for Federal

24 entitlement and subsidy programs, measures that

25 are consistent with the historic approach of the rec-
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1 lamation program’s acreage limitations that seek to

2 limit water subsidies to smaller farms; and

3 (7) including a means test based on gross in4 come in the reclamation program will increase the

5 effectiveness of carrying out the family farm goals of

6 the Federal reclamation laws.

7 SEC. 3. AMENDMENTS.

8 (a) DEFINITIONS.—Section 202 of the Reclamation

9 Reform Act of 1982 (43 U.S.C. 390bb) is amended—

10 (1) by redesignating paragraphs (7), (8), (9),

11 (10), and (11) as paragraphs (9), (10), (11), (12),

12 and (13), respectively;

13 (2) in paragraph (6) by striking ‘‘owned or op14 erated under a lease which’’ and inserting ‘‘owned,

15 leased, or operated by an individual or legal entity

16 and which’’;

17 (3) by inserting after paragraph (6) the follow18 ing:

19 ‘‘(7) LEGAL ENTITY.—The term ‘legal entity’

20 includes a corporation, association, partnership,

21 trust, joint tenancy, or tenancy in common, or any

22 other entity that owns, leases, or operates a farm

23 operation for the benefit of more than 1 individual

24 under any form of agreement or arrangement.

25 ‘‘(8) OPERATOR.—
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1 ‘‘(A) IN GENERAL.—The term ‘operator’—

2 ‘‘(i) means an individual or legal en3 tity that operates a single farm operation

4 on a parcel (or parcels) of land that is

5 owned or leased by another person (or per6 sons) under any form of agreement or ar7 rangement (or agreements or arrange8 ments); and

9 ‘‘(ii) if the individual or legal entity—

10 ‘‘(I) is an employee of an individ11 ual or legal entity, includes the indi12 vidual or legal entity; or

13 ‘‘(II) is a legal entity that con14 trols, is controlled by, or is under

15 common control with another legal en16 tity, includes each such other legal en17 tity.

18 ‘‘(B) OPERATION OF A FARM OPER19 ATION.—For the purposes of subparagraph (A),

20 an individual or legal entity shall be considered

21 to operate a farm operation if the individual or

22 legal entity is the person that performs the

23 greatest proportion of the decisionmaking for

24 and supervision of the agricultural enterprise on

25 land served with irrigation water.’’; and
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1 (4) by adding at the end the following:

2 ‘‘(14) SINGLE FARM OPERATION.—

3 ‘‘(A) IN GENERAL.—The term ‘single farm

4 operation’ means the total acreage of land

5 served with irrigation water for which an indi6 vidual or legal entity is the operator.

7 ‘‘(B) RULES FOR DETERMINING WHETHER

8 SEPARATE PARCELS ARE OPERATED AS A SIN9 GLE FARM OPERATION.—

10 ‘‘(i) EQUIPMENT- AND LABOR-SHAR11 ING ACTIVITIES.—The conduct of equip12 ment- and labor-sharing activities on sepa13 rate parcels of land by separate individuals

14 or legal entities shall not by itself serve as

15 a basis for concluding that the farming op16 erations of the individuals or legal entities

17 constitute a single farm operation.

18 ‘‘(ii) PERFORMANCE OF CERTAIN

19 SERVICES.—The performance by an indi20 vidual or legal entity of an agricultural

21 chemical application, pruning, or harvest22 ing for a farm operation on a parcel of

23 land shall not by itself serve as a basis for

24 concluding that the farm operation on that

25 parcel of land is part of a single farm op-
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1 eration operated by the individual or entity

2 on other parcels of land.’’.

3 (b) IDENTIFICATION OF OWNERS, LESSEES, AND OP4 ERATORS AND OF SINGLE FARM OPERATIONS.—The Rec5 lamation Reform Act of 1982 (43 U.S.C. 39aa et seq.)

6 is amended by inserting after section 201 the following:

7 ‘‘SEC. 201A. IDENTIFICATION OF OWNERS, LESSEES, AND

8 OPERATORS AND OF SINGLE FARM OPER9 ATIONS.

10 ‘‘(a) IN GENERAL.—Subject to subsection (b), for

11 each parcel of land to which irrigation water is delivered

12 or proposed to be delivered, the Secretary shall identify

13 a single individual or legal entity as the owner, lessee, or

14 operator.

15 ‘‘(b) SHARED DECISIONMAKING AND SUPER16 VISION.—If the Secretary determines that no single indi17 vidual or legal entity is the owner, lessee, or other individ18 ual that performs the greatest proportion of decisionmak19 ing for and supervision of the agricultural enterprise on

20 a parcel of land—

21 ‘‘(1) all individuals and legal entities that own,

22 lease, or perform a proportion of decisionmaking and

23 supervision that is equal as among themselves but

24 greater than the proportion performed by any other
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1 individual or legal entity shall be considered jointly

2 to be the owner, lessee, or operator; and

3 ‘‘(2) all parcels of land of which any such indi4 vidual or legal entity is the owner, lessee, or opera5 tor shall be considered to be part of the single farm

6 operation of the owner, lessee, or operator identified

7 under subsection (1).

8 (c) PRICING.—Section 205 of the Reclamation Re9 form Act of 1982 (43 U.S.C. 390ee) is amended by adding

10 at the end the following:

11 ‘‘(d) SINGLE FARM OPERATIONS GENERATING MORE

12 THAN $500,000 IN GROSS FARM INCOME.—

13 ‘‘(1) IN GENERAL.—Notwithstanding sub14 sections (a), (b), and (c), in the case of—

15 ‘‘(A) a qualified recipient that reports

16 gross farm income from a single farm operation

17 in excess of $500,000 for a taxable year; or

18 ‘‘(B) a limited recipient that received irri19 gation water on or before October 1, 1981, and

20 that reports gross farm income from a single

21 farm operation in excess of $500,000 for a tax22 able year;

23 irrigation water may be delivered to the single farm

24 operation of the qualified recipient or limited recipi25 ent at less than full cost to a number of acres that
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1 does not exceed the number of acres determined

2 under paragraph (2).

3 ‘‘(2) MAXIMUM NUMBER OF ACRES TO WHICH

4 IRRIGATION WATER MAY BE DELIVERED AT LESS

5 THAN FULL COST.—The number of acres determined

6 under this subparagraph is the number equal to the

7 number of acres of the single farm operation multi8 plied by a fraction, the numerator of which is

9 $500,000 and the denominator of which is the

10 amount of gross farm income reported by the quali11 fied recipient or limited recipient in the most recent

12 taxable year.

13 ‘‘(3) INFLATION ADJUSTMENT.—

14 ‘‘(A) IN GENERAL.—The $500,000 amount

15 under paragraphs (1) and (2) for any taxable

16 year beginning in a calendar year after 1997

17 shall be equal to the product of—

18 ‘‘(i) $500,000, multiplied by

19 ‘‘(ii) the inflation adjustment factor

20 for the taxable year.

21 ‘‘(B) INFLATION ADJUSTMENT FACTOR.—

22 The term ‘inflation adjustment factor’ means,

23 with respect to any calendar year, a fraction the

24 numerator of which is the GDP implicit price

25 deflator for the preceding calendar year and the
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1 denominator of which is the GDP implicit price

2 deflator for 1996. Not later than April 1 of any

3 calendar year, the Secretary shall publish the

4 inflation adjustment factor for the preceding

5 calendar year.

6 ‘‘(C) GDP IMPLICIT PRICE DEFLATOR.—

7 For purposes of subparagraph (B), the term

8 ‘GDP implicit price deflator’ means the first re9 vision of the implicit price deflator for the gross

10 domestic product as computed and published by

11 the Secretary of Commerce.

12 ‘‘(D) ROUNDING.—If any increase deter13 mined under subparagraph (A) is not a multiple

14 of $100, the increase shall be rounded to the

15 next lowest multiple of $100.’’.

16 (d) CERTIFICATION OF COMPLIANCE.—Section 206

17 of the Reclamation Reform Act of 1982 (43 U.S.C. 390ff)

18 is amended to read as follows:

19 ‘‘SEC. 206. CERTIFICATION OF COMPLIANCE.

20 ‘‘(a) IN GENERAL.—As a condition to the receipt of

21 irrigation water for land in a district that has a contract

22 described in section 203, each owner, lessee, or operator

23 in the district shall furnish the district, in a form pre24 scribed by the Secretary, a certificate that the owner, les25 see, or operator is in compliance with this title, including
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1 a statement of the number of acres owned, leased, or oper2 ated, the terms of any lease or agreement pertaining to

3 the operation of a farm operation, and, in the case of a

4 lessee or operator, a certification that the rent or other

5 fees paid reflect the reasonable value of the irrigation

6 water to the productivity of the land.

7 ‘‘(b) DOCUMENTATION.—The Secretary may require

8 a lessee or operator to submit for the Secretary’s examina9 tion—

10 ‘‘(1) a complete copy of any lease or other

11 agreement executed by each of the parties to the

12 lease or other agreement; and

13 ‘‘(2) a copy of the return of income tax imposed

14 by chapter 1 of the Internal Revenue Code of 1986

15 for any taxable year in which the single farm oper16 ation of the lessee or operator received irrigation

17 water at less than full cost.’’.

18 (e) TRUSTS.—Section 214 of the Reclamation Re19 form Act of 1982 (43 U.S.C. 390nn) is repealed.

20 (f) ADMINISTRATIVE PROVISIONS.—

21 (1) PENALTIES.—Section 224(c) of the Rec22 lamation Reform Act of 1982 (43 U.S.C. 390ww(c))

23 is amended—

24 (A) by striking ‘‘(c) The Secretary’’ and

25 inserting the following:
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1 ‘‘(c) REGULATIONS; DATA COLLECTION; PEN2 ALTIES.—

3 ‘‘(1) REGULATIONS; DATA COLLECTION.—The

4 Secretary’’; and

5 (B) by adding at the end the following:

6 ‘‘(2) PENALTIES.—Notwithstanding any other

7 provision of law, the Secretary shall establish appro8 priate and effective penalties for failure to comply

9 with any provision of this Act or any regulation is10 sued under this Act.’’.

11 (2) INTEREST.—Section 224(i) of the Reclama12 tion Reform Act of 1982 (43 U.S.C. 390ww(i)) is

13 amended by striking the last sentence and inserting

14 the following: ‘‘The interest rate applicable to under15 payments shall be equal to the rate applicable to ex16 penditures under section 202(3)(C).’’.

17 (g) REPORTING.—Section 228 of the Reclamation

18 Reform Act of 1982 (43 U.S.C. 390zz) is amended by in19 serting ‘‘operator or’’ before ‘‘contracting entity’’ each

20 place it appears.

21 (h) MEMORANDUM OF UNDERSTANDING.—The Rec22 lamation Reform Act of 1982 (43 U.S.C. 390aa et seq.)

23 is amended—

24 (1) by redesignating sections 229 and 230 as

25 sections 230 and 231; and
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1 (2) by inserting after section 228 the following:

2 ‘‘SEC. 229. MEMORANDUM OF UNDERSTANDING.

3 ‘‘The Secretary, the Secretary of the Treasury, and

4 the Secretary of Agriculture shall enter into a memoran5 dum of understanding or other appropriate instrument to

6 permit the Secretary, notwithstanding section 6103 of the

7 Internal Revenue Code of 1986, to have access to and use

8 of available information collected or maintained by the De9 partment of the Treasury and the Department of Agri10 culture that would aid enforcement of the ownership and

11 pricing limitations of Federal reclamation law.’’.

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