Basic Changes Needed to Avoid Abuse of the 960-Acre Limit

GAO discussed the Bureau of Reclamation's implementation of the 960-acre limitation for federally subsidized water under the Reclamation Reform Act of 1982. GAO noted that: (1) the Reclamation Reform Act did not preclude multiple landholdings from continuing to be operated collectively as one large farm, while individually qualifying for federally subsidized water; (2) some farmers took advantage of that loophole by using various partnerships, corporations or trust arrangements to reorganize their farms in order to receive additional federally subsidized water; (3) smaller landholdings continued to be operated collectively as single large farms; and (4) such reorganizations reduced revenues to which the federal government would have been entitled if the multiple landholdings had been considered collectively as large farms subject to the 960-acre limit. GAO believes that: (1) the Reclamation Reform Act must be amended if federally subsidized water is to be limited to no more than 960 acres of leased or owned land; and (2) it would be more effective to close the loophole that allows multiple landholdings to operate together as one large farm and receive subsidized water on the entire acreage.