Will Big Growers Go Back to Water in Public Trough?

After 85 years of looking the other way while large Western growers reaped the profits of a multibillion-dollar water subsidy program, the federal Bureau of Reclamation has finally proposed new regulations that would place an outer limit on the taxpayer subsidies.

Naturally the proposed regulations have raised a hue and cry from the growers--especially in California and Arizona, where many operations served by the Bureau of Reclamation cover thousands of acres. Apparently succumbing to their pressure, the bureau’s commissioner, C. Dale Duvall, has already sounded the retreat. It is up to Interior Secretary Donald P. Hodel, in whose hands the final decision rests, to resist the pressures for continued subsidies and to adopt the regulations without further ado.

At issue is the size of farming operations that should be entitled to receive subsidized water--worth more than $100 an acre-foot, yet sold at an average price of less than $10. The original Reclamation Act, designed to promote the development of the West by small family farms, provided that only farms of up to 160 acres would be eligible for such subsidies. In the face of widespread evasions of this limit through leasing arrangements, Congress revised the law in 1982, explicitly including leased lands as subject to acreage limitations but greatly expanding the land eligible to receive subsidized water--to 960 acres. While operations of more than 960 acres may continue to receive federal water, they must pay for water on those lands at a rate equivalent to its full, unsubsidized cost.

The 960-acre full-cost threshold was the key element of a compromise between the growers and those seeking stricter limits on water subsidies. But, in the five years since the reform act was passed, these growers have devised a new method to keep all of their water without losing any of the subsidies. Farms are being divided into 960-acre parcels--on paper--while in reality they continue to be run as units of several thousand acres. Typical of such arrangements, one 6,000-acre farm was divided into seven parcels of approximately 960 acres, each “owned” by a newly formed trust. The business addresses of these seven are the same as that of the company that used to farm the entire operation as one, and all seven still employ the same manager. But not a single acre of this 6,000-acre ranch is paying the full cost of water that was intended by Congress.

The new regulations reflect the government’s awareness of the efforts by the large-scale growers to skim off unintended subsidies, and a refreshing attempt to restrict the subsidies to the farmers that Congress actually intended to receive them. Unaccustomed to such treatment by the Bureau of Reclamation, the growers packed the hearings on the proposed regulations and howled in protest. The gist of their argument is that, because the reform act does not explicitly mention every type of farm-management arrangement that the growers can devise, Congress deliberately sanctioned the creation of new loopholes in the law.

Apparently Commissioner Duvall has found this argument persuasive, for in a recent interview he was quoted as saying, “I don’t think it is incumbent on the Bureau of Reclamation to demonstrate more courage in limiting those operations than Congress did.” But we submit that the 97th Congress had that courage, and in fact made it clear in its conference report that it wanted all farm operations of more than 960 acres to pay the real cost of water: “The conferees agreed that the benefits of the new law . . . should be available to irrigators in districts having existing contracts only if the district agrees to amend its contract to provide for the reduction of the subsidy for larger farming operations in excess of 960 acres.” Thus there is no room for interpreting the reform act to allow farm-management arrangements of greater than 960 acres to continue receiving subsidized water. To allow otherwise would be to defeat the single overriding purpose of the new law.

Some growers have argued that as long as their operations are owned by families they should be considered family farms and be exempt from the full-cost requirement. The logic of argument does not withstand scrutiny. Obviously, some of the richest and most powerful companies in America are controlled by families. Yet no one would suggest that they should be eligible for more government subsidies than their corporate brethren.

The Bureau of Reclamation is at a critical juncture. It can exercise its administrative prerogative and attempt to carry out the will of Congress, or it can pretend not to understand and wait for further direction. But it is unlikely that the 100th Congress will be any more interested in giving away cheap water to large growers--by any definition--than was the 97th Congress. Throwing reclamation reform back to Congress might make the commissioner’s job easier, but the fact is that he does not have that choice. The bureau already has the authority to enforce the 1982 reform act so that all operators of more than 960 acres pay their fair share. If this mandate is ignored, it will simply return the bureau to its “good old days” of looking the other way while wealthy growers feed at the public trough.