House Panel OKs Reform of Water Subsidy

In a major breakthrough for reform of farm water subsidies, the House Interior Committee overwhelmingly approved legislation Wednesday that would bar delivery of government-subsidized water to large farms in California and other Western states.

The compromise measure, which breezed through the committee on a 38-2 vote, also would phase out “double subsidies” by requiring farmers to choose between low-cost federal water and government payments for growing wheat, rice, cotton and other surplus crops.

The final water subsidy provisions of the bill were worked out by Rep. George Miller (D-Martinez), acting chairman of the Interior Committee, and Rep. Richard H. Lehman (D-Sanger), who represents the Central Valley farming area in California.

The compromise--designed to enforce an existing 960-acre limit on farms that receive irrigation subsidies while providing safeguards for smaller farmers who share equipment or work together--was accepted by voice vote.

In the past, lawmakers from rural areas in the West have fought fiercely against proposals to restrict the availability of irrigation subsidies. The committee action, however, reflected current political sentiment in the House, where proponents of limits on low-cost water have a strong majority behind them.

The bill is considered certain to pass the full House in the near future, and the Miller-Lehman agreement is expected to improve its prospects in the Senate. A similar measure that lacked the safeguards was approved by the House last year but died in the Senate after then-Sen. Pete Wilson (R-Calif.) was able to block a vote.

“This (new compromise) agreement goes a long way toward disarming those who simply wanted to kill the bill,” Miller said.

“This is a pretty solid piece of legislation that we were able to get a consensus for,” Lehman said. “The ultimate package will look pretty much like this.”

The 960-acre limit was enacted in 1982, but Miller said huge farms and agribusiness firms were able to continue to receive federally subsidized water by dividing their holdings into trusts and partnerships made up of multiple 960-acre units.

Under the new compromise, no new trusts could be created and existing trusts would have to pay full cost for federal water after a three-year transition period. After nine years, these trusts would be required to disband.

Lehman said “safe harbors” would be established to allow individual farmers to make arm’s-length agreements with other farmers to share costs of spraying pesticides or buying expensive equipment even if their combined holdings exceeded 960 acres. Similar agreements between family members would be allowed if they met prescribed guidelines and were approved by the secretary of the interior.

“This restores the integrity of the program,” Miller told reporters after the committee action. “This closes the loopholes. . . . all the room for shenanigans to get around the acreage limitation has been eliminated.”

Lehman, who opposed Miller’s earlier efforts to reduce water subsidies on grounds they would hurt smaller family farmers who were not creating the problem, said the safeguards he negotiated with the chairman made it acceptable.

“It does place new burdens on farmers but these burdens are not unrealistic, given the enormous benefits of the federal water program,” Lehman told the panel.

Earlier, Miller said the value of the federal water subsidies averages about $300,000 per farmer annually. As large farmers pay full cost for water, he said, they will have to make more efficient use of a commodity that is now in short supply in California and other drought-stricken states.

In a related development, Lehman managed to defeat a proposal by Rep. Sam Gejdenson (D-Conn.) to prevent farmers who grow surplus crops from getting any low-cost water whether or not they received agricultural subsidies.

“American taxpayers should not help grow crops that are already in surplus,” Gejdenson said. “This fails the common-sense test.”

But Lehman argued that farmers should be allowed to “choose their subsidies” by getting either subsidized federal water or government payments for such designated crops as wheat, cotton, feed grains and rice.

Under a provision of the bill proposed by Lehman, water subsidies would be phased out over a period of four years for farmers who choose to continue to receive crop-support payments. Those who prefer the low-cost water would be required to give up the crop subsidies.

Lehman noted that his plan would eliminate the double subsidies that Gejdenson targeted last year in an amendment that won overwhelming House support. But the Lehman program would allow growers of surplus crops to keep receiving subsidized water as long as they do not also accept crop support payments, a practice that Gejdenson wanted the committee to prohibit.

On a 24-17 vote, the committee sided with Lehman. Gejdenson, however, could renew his latest proposal when the bill comes to the House floor later this month, and apparently has a good chance of winning there.

The bill, which contains money for several large dams or water projects in Utah, Wyoming and other Western states, also includes the Grand Canyon Protection Act, designed to reduce environmental damage by regulating the flows from the nearby Glen Canyon Dam.

Initial reaction to the large-farm compromise by representatives of California agriculture was favorable.

Jason Peltier, manager of the Central Valley Project Water Assn., termed it “a great step forward in getting the big guys and recognizing that there are a lot of innocent small farmers out there who need to be protected.”

While the legislation may need to be clarified, Peltier said, “this is a win-win solution . . . it’s a happy day.”

Mike Henry, a spokesman for the California Farm Bureau Federation, said Lehman’s proposals were “far more acceptable” to agriculture than other proposals, but noted that the legislation may change as it moves through Congress. “It’s early in the game,” Henry said.

The proposal to end double subsidies, however, ran into strong criticism.

Jack Kenward, spokesman for the Rice Growers’ Assn. of California, said the ultimate result would be to raise the price of food, especially rice.

“Rice is not a luxury food,” he said. The proposal would “kick up the price of a staple food in the diets of those least able to afford the increased price.”

Speaking on the double-subsidy issue, Peltier said it was not nearly as important for California as it would be for northern tier states such as Washington, Idaho, Montana and the Dakotas, where the growing season is shorter and fewer crops can be planted.

“Probably what the committee has passed is the least offensive version of that kind of policy change that we’ve ever seen,” he concluded.

Times staff writer Maria L. La Ganga in Los Angeles contributed to this report.