text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Irrigation Subsidy Reduction Act of 
  1996''.
  
  SEC. 2. FINDINGS.
  
      Congress finds that--
              (1) the Federal reclamation program has been in existence 
          for over 90 years, with an estimated taxpayer investment of 
          over $70,000,000,000;
              (2) the program has had and continues to have an enormous 
          effect on the water resources and aquatic environments of the 
          western States;
              (3) irrigation water made available from Federal water 
          projects in the West is a very valuable resource for which 
          there are increasing and competing demands;
              (4) the justification for providing water at less than full 
          cost was to benefit and promote the development of small family 
          farms and exclude large corporate farms, but this purpose has 
          been frustrated over the years due to inadequate implementation 
          of subsidy and acreage limits;
              (5) below-cost water prices tend to encourage excessive use 
          of scarce water supplies in the arid regions of the West, and 
          reasonable price increases to the wealthiest western farmers 
          would provide an economic incentive for greater water 
          conservation;
              (6) the Federal Government has increasingly applied 
          eligibility tests based on income for Federal entitlement and 
          subsidy programs, measures that are consistent with the 
          historic approach of the reclamation program's acreage 
          limitations that seek to limit water subsidies to smaller 
          farms; and
              (7) including a means test based on gross income in the 
          reclamation program will increase the effectiveness of carrying 
          out the family farm goals of the Federal reclamation laws.
  
  SEC. 3. AMENDMENTS.
  
      (a) Definitions.--Section 202 of the Reclamation Reform Act of 1982 
  (43 U.S.C. 390bb) is amended--
              (1) by redesignating paragraphs (7), (8), (9), (10), and 
          (11) as paragraphs (9), (10), (11), (12), and (13), 
          respectively;
              (2) in paragraph (6) by striking ``owned or operated under 
          a lease which'' and inserting ``owned, leased, or operated by 
          an individual or legal entity and which'';
              (3) by inserting after paragraph (6) the following:
              ``(7) Legal entity.--The term `legal entity' includes a 
          corporation, association, partnership, trust, joint tenancy, or 
          tenancy in common, or any other entity that owns, leases, or 
          operates a farm operation for the benefit of more than 1 
          individual under any form of agreement or arrangement.
              ``(8) Operator.--
                      ``(A) In general.--The term `operator'--
                              ``(i) means an individual or legal entity 
                          that operates a single farm operation on a 
                          parcel (or parcels) of land that is owned or 
                          leased by another person (or persons) under any 
                          form of agreement or arrangement (or agreements 
                          or arrangements); and
                              ``(ii) if the individual or legal entity--
                                      ``(I) is an employee of an 
                                  individual or legal entity, includes 
                                  the individual or legal entity; or
                                      ``(II) is a legal entity that 
                                  controls, is controlled by, or is under 
                                  common control with another legal 
                                  entity, includes each such other legal 
                                  entity.
                      ``(B) Operation of a farm operation.--For the 
                  purposes of subparagraph (A), an individual or legal 
                  entity shall be considered to operate a farm operation 
                  if the individual or legal entity is the person that 
                  performs the greatest proportion of the decisionmaking 
                  for and supervision of the agricultural enterprise on 
                  land served with irrigation water.''; and
              (4) by adding at the end the following:
              ``(14) Single farm operation.--
                      ``(A) In general.--The term `single farm operation' 
                  means the total acreage of land served with irrigation 
                  water for which an individual or legal entity is the 
                  operator.
                      ``(B) Rules for determining whether separate 
                  parcels are operated as a single farm operation.--
                              ``(i) Equipment- and labor-sharing 
                          activities.--The conduct of equipment- and 
                          labor-sharing activities on separate parcels of 
                          land by separate individuals or legal entities 
                          shall not by itself serve as a basis for 
                          concluding that the farming operations of the 
                          individuals or legal entities constitute a 
                          single farm operation.
                              ``(ii) Performance of certain services.--
                          The performance by an individual or legal 
                          entity of an agricultural chemical application, 
                          pruning, or harvesting for a farm operation on 
                          a parcel of land shall not by itself serve as a 
                          basis for concluding that the farm operation on 
                          that parcel of land is part of a single farm 
                          operation operated by the individual or entity 
                          on other parcels of land.''.
      (b) Identification of Owners, Lessees, and Operators and of Single 
  Farm Operations.--The Reclamation Reform Act of 1982 (43 U.S.C. 39aa et 
  seq.) is amended by inserting after section 201 the following:
  
  ``SEC. 201A. IDENTIFICATION OF OWNERS, LESSEES, AND OPERATORS AND OF 
                SINGLE FARM OPERATIONS.
  
      ``(a) In General.--Subject to subsection (b), for each parcel of 
  land to which irrigation water is delivered or proposed to be 
  delivered, the Secretary shall identify a single individual or legal 
  entity as the owner, lessee, or operator.
      ``(b) Shared Decisionmaking and Supervision.--If the Secretary 
  determines that no single individual or legal entity is the owner, 
  lessee, or other individual that performs the greatest proportion of 
  decisionmaking for and supervision of the agricultural enterprise on a 
  parcel of land--
              ``(1) all individuals and legal entities that own, lease, 
          or perform a proportion of decisionmaking and supervision that 
          is equal as among themselves but greater than the proportion 
          performed by any other individual or legal entity shall be 
          considered jointly to be the owner, lessee, or operator; and
              ``(2) all parcels of land of which any such individual or 
          legal entity is the owner, lessee, or operator shall be 
          considered to be part of the single farm operation of the 
          owner, lessee, or operator identified under subsection (1).
      (c) Pricing.--Section 205 of the Reclamation Reform Act of 1982 (43 
  U.S.C. 390ee) is amended by adding at the end the following:
      ``(d) Single Farm Operations Generating More Than $500,000 in Gross 
  Farm Income.--
              ``(1) In general.--Notwithstanding subsections (a), (b), 
          and (c), in the case of--
                      ``(A) a qualified recipient that reports gross farm 
                  income from a single farm operation in excess of 
                  $500,000 for a taxable year; or
                      ``(B) a limited recipient that received irrigation 
                  water on or before October 1, 1981, and that reports 
                  gross farm income from a single farm operation in 
                  excess of $500,000 for a taxable year;
          irrigation water may be delivered to the single farm operation 
          of the qualified recipient or limited recipient at less than 
          full cost to a number of acres that does not exceed the number 
          of acres determined under paragraph (2).
              ``(2) Maximum number of acres to which irrigation water may 
          be delivered at less than full cost.--The number of acres 
          determined under this subparagraph is the number equal to the 
          number of acres of the single farm operation multiplied by a 
          fraction, the numerator of which is $500,000 and the 
          denominator of which is the amount of gross farm income 
          reported by the qualified recipient or limited recipient in the 
          most recent taxable year.
              ``(3) Inflation adjustment.--
                      ``(A) In general.--The $500,000 amount under 
                  paragraphs (1) and (2) for any taxable year beginning 
                  in a calendar year after 1997 shall be equal to the 
                  product of--
                              ``(i) $500,000, multiplied by
                              ``(ii) the inflation adjustment factor for 
                          the taxable year.
                      ``(B) Inflation adjustment factor.--The term 
                  `inflation adjustment factor' means, with respect to 
                  any calendar year, a fraction the numerator of which is 
                  the GDP implicit price deflator for the preceding 
                  calendar year and the denominator of which is the GDP 
  implicit price deflator for 1996. Not later than April 1 of any 
  calendar year, the Secretary shall publish the inflation adjustment 
  factor for the preceding calendar year.
                      ``(C) GDP implicit price deflator.--For purposes of 
                  subparagraph (B), the term `GDP implicit price 
                  deflator' means the first revision of the implicit 
                  price deflator for the gross domestic product as 
                  computed and published by the Secretary of Commerce.
                      ``(D) Rounding.--If any increase determined under 
                  subparagraph (A) is not a multiple of $100, the 
                  increase shall be rounded to the next lowest multiple 
                  of $100.''.
      (d) Certification of Compliance.--Section 206 of the Reclamation 
  Reform Act of 1982 (43 U.S.C. 390ff) is amended to read as follows:
  
  ``SEC. 206. CERTIFICATION OF COMPLIANCE.
  
      ``(a) In General.--As a condition to the receipt of irrigation 
  water for land in a district that has a contract described in section 
  203, each owner, lessee, or operator in the district shall furnish the 
  district, in a form prescribed by the Secretary, a certificate that the 
  owner, lessee, or operator is in compliance with this title, including 
  a statement of the number of acres owned, leased, or operated, the 
  terms of any lease or agreement pertaining to the operation of a farm 
  operation, and, in the case of a lessee or operator, a certification 
  that the rent or other fees paid reflect the reasonable value of the 
  irrigation water to the productivity of the land.
      ``(b) Documentation.--The Secretary may require a lessee or 
  operator to submit for the Secretary's examination--
              ``(1) a complete copy of any lease or other agreement 
          executed by each of the parties to the lease or other 
          agreement; and
              ``(2) a copy of the return of income tax imposed by chapter 
          1 of the Internal Revenue Code of 1986 for any taxable year in 
          which the single farm operation of the lessee or operator 
          received irrigation water at less than full cost.''.
      (e) Trusts.--Section 214 of the Reclamation Reform Act of 1982 (43 
  U.S.C. 390nn) is repealed.
      (f) Administrative Provisions.--
              (1) Penalties.--Section 224(c) of the Reclamation Reform 
          Act of 1982 (43 U.S.C. 390ww(c)) is amended--
                      (A) by striking ``(c) The Secretary'' and inserting 
                  the following:
      ``(c) Regulations; Data Collection; Penalties.--
              ``(1) Regulations; data collection.--The Secretary''; and
                      (B) by adding at the end the following:
              ``(2) Penalties.--Notwithstanding any other provision of 
          law, the Secretary shall establish appropriate and effective 
          penalties for failure to comply with any provision of this Act 
          or any regulation issued under this Act.''.
              (2) Interest.--Section 224(i) of the Reclamation Reform Act 
          of 1982 (43 U.S.C. 390ww(i)) is amended by striking the last 
          sentence and inserting the following: ``The interest rate 
          applicable to underpayments shall be equal to the rate 
          applicable to expenditures under section 202(3)(C).''.
      (g) Reporting.--Section 228 of the Reclamation Reform Act of 1982 
  (43 U.S.C. 390zz) is amended by inserting ``operator or'' before 
  ``contracting entity'' each place it appears.
      (h) Memorandum of Understanding.--The Reclamation Reform Act of 
  1982 (43 U.S.C. 390aa et seq.) is amended--
              (1) by redesignating sections 229 and 230 as sections 230 
          and 231; and
              (2) by inserting after section 228 the following:
  
  ``SEC. 229. MEMORANDUM OF UNDERSTANDING.
  
      ``The Secretary, the Secretary of the Treasury, and the Secretary 
  of Agriculture shall enter into a memorandum of understanding or other 
  appropriate instrument to permit the Secretary, notwithstanding section 
  6103 of the Internal Revenue Code of 1986, to have access to and use of 
  available information collected or maintained by the Department of the 
  Treasury and the Department of Agriculture that would aid enforcement 
  of the ownership and pricing limitations of Federal reclamation law.''.
target: Irrigation Subsidy Reduction Act of 1996 - Amends the Reclamation Reform Act of 1982 to define the terms "legal entity," "operator," and "single farm operation." 
  Directs the Secretary of the Interior, for each parcel of land to which irrigation water is delivered or proposed to be delivered, to identify a single individual or legal entity as the owner, lessee, or operator. 
  Allows irrigation water to be delivered at less than the normal per-acre cost to either:  (1) a qualified recipient that reports gross farm income from a single farm operation in excess of $500,000 per taxable year; or (2) a limited recipient that received such water on or before October 1, 1981, and that reports gross farm income in excess of such amount.  Provides an inflation adjustment for calendar years after 1997. 
  Requires lessees (currently, only owners and operators) of an irrigation district to furnish such district a certification of compliance with the Act.  Allows the Secretary to require a lessee or operator to submit for examination a copy of a tax return for any taxable year in which the single farm operation of the lessee or operator received irrigation water at less than full cost. 
  Repeals a provision exempting district lands held in trust from Federal reclamation ownership and cost pricing limitations. 
  Directs the Secretary to establish penalties for failure to comply with provisions of the Act. 
  Directs the Secretaries of the Interior, the Treasury, and Agriculture to enter into a memorandum of understanding to permit the Secretary of the Interior to have access to and use available information collected or maintained by either the Department of the Treasury or Agriculture that would aid in enforcement of the ownership and pricing limitations of Federal reclamation law.
feat_title: Irrigation Subsidy Reduction Act of 1996