Water Conservation: For Farmers . . . : How Big Farms Escape Paying Full Value--and Soak Up All They Want

A loophole in federal farm water subsidy laws is costing taxpayers tens of millions of dollars a year. It may also be costing the planet Earth, and drought-stricken California, large amounts of increasingly scarce water.

Under the Reclamation Reform Act of 1982, Congress intended to continue giving farmers a break by selling water for far less than its true cost. The program saves a qualifying farm--one of 960 acres or less--in California’s Central Valley an estimated $304,000 per year. Larger landowners must either pare the number of acres owned to 960 or pay full price for water. The minute the bill became law, however, many huge Western agribusinesses simply reorganized--on paper only--into several parcels of land small enough to qualify for cheap water. The legal acreage set by the act excludes a relatively small number of immense farms, located mostly in California, Washington and Arizona. One federal study estimates that subsidies to eight oversize Central Valley farms alone represent $1.3 million in lost federal revenue each year.

The Interior Department’s Bureau of Reclamation is responsible for enforcement. The agency noticed the title-deed shell game but never blew the whistle on the loophole. In answering federal auditors, the department fell back on its own semantic dodge: “While we agree that Congress clearly intended to stop the flow of federally subsidized water to land over 960 acres owned or leased by one individual, we are not convinced that Congress expected this provision to be applied to land being ‘operated’ as one unit.” The bureau has conceded its oversight and pledged to enforce a rewritten law.

Meanwhile not only is the loophole costing tax dollars, it virtually guarantees that California’s water shortages will continue. A staggering 85% of the state’s water is used by agriculture, a business that would doubtless be more efficient if it paid the true price of water. Further, failing to provide farmers with incentives to cut back mocks the conservation efforts of drought-stricken communities statewide.

A companion bill would further help by obliging farmers to enroll in just one of the numerous federal or state subsidy programs.

Taxpayers are losing more than the tens of millions of dollars in revenue the subsidized-water loophole costs each year. They are propping up the landowners a second time when they conscientiously work to conserve water in their homes, while some large farmers continue to squander the precious resource. The amendment to the Reclamation Reform Act needs Senate approval soon, especially from Western senators.