Crapo, Bennet, Buck, Neguse Introduce Bipartisan Water and Agriculture Tax Reform Act

Washington, D.C.--U.S. Senators Mike Crapo (R-Idaho) and Michael Bennet (D-Colorado) have introduced the Water and Agriculture Tax Reform (WATER) Act.  The bipartisan legislation reforms outdated tax provisions hindering investment in important infrastructure advances.

Co-sponsors of the WATER Act include U.S. Senators Jim Risch (R-Idaho), Steve Daines (R-Montana), Cynthia Lummis (R-Wyoming) and John Barrasso (R-Wyoming).  Representatives Ken Buck (R-Colorado) and Joe Neguse (D-Colorado) will introduce companion legislation in the U.S. House of Representatives.

"Thanks to skyrocketing costs, Idaho’s farmers and ranchers are being asked to pay more for everything—including maintaining and operating an aging water infrastructure system,” said Crapo.  “This bill provides the necessary updates to tax code to meet water use needs in the West.”

"As they face a 1,200 year mega-drought, farmers and ranchers in the West now more than ever are relying on water infrastructure to keep their land productive," said Bennet.  "Our bipartisan legislation helps ensure ditch and irrigation companies in Colorado and across the West are able to keep critical water infrastructure in good, working condition."

“Farmers and ranchers in rural Colorado play a critical role in our country’s agriculture industry. They should never be penalized for maintaining and developing their own water infrastructure,” said Buck.  “The WATER Act will reduce the cost of water by cutting the burdensome red tape that acts as a barrier to water infrastructure improvements.”

“I am proud to join my colleagues in introducing the WATER Act, a bill to support local farmers, ranchers, and communities across Colorado maintain their water infrastructure,” said Neguse.  “This bill will cut red tape and ensure access to critical water resources for our rural communities.”

“Idaho water users applaud Senator Crapo for his efforts to find meaningful, bipartisan solutions for the skyrocketing costs of operating and maintaining aging water infrastructure,” said Paul Arrington, Idaho Water Users Association executive director and general counsel.  “Idaho's water delivery organizations work hard to keep the cost of water delivery as low as possible to ensure that the state's diverse agricultural economy can continue feeding the nation and the world.  In order to keep costs low to farmers, income sources may need to be diversified. The WATER Act would provide a necessary tool in this effort.”

This legislation would allow mutual water storage and delivery companies to maintain their tax-exempt status, even if they receive more than 15 percent of their revenue from non-member sources, as long as the monies are reinvested into maintenance, operations and infrastructure improvements.

The cost of maintaining and operating aging water infrastructure has skyrocketed and made it impossible for many mutual ditch, irrigation or water companies to operate solely on member income.   As companies have been unable to meet the 85-percent source requirement, many have been forced to put off critical infrastructure improvements, while a number of others have lost their tax-exempt status.

Furthermore, a shareholder who owns more shares owes proportionally larger assessments to the corporation.  As such, mutual ditch, irrigation and water companies frequently operate on a one-share, one-vote basis.   Although these companies have operated in this manner for more than one hundred years, the Internal Revenue Service (IRS) has informally indicated that these companies must now operate on a one-shareholder, one-vote basis if they want to maintain their tax-exempt status.

Pursuing this position would strip the tax-exemption of mutual ditch, irrigation and water companies in most western states.  The legislation addresses this issue by indicating that companies will not jeopardize their tax-exempt status if they continue to operate on a one-share, one-vote basis in accordance with state law.

The bill is supported by Idaho Water Users Association and the American Farm Bureau Federation.

Full text is available HERE.