February 05, 2015

Crapo Introduces Bipartisan Water Infrastructure Legislation

Says bill would help keep farmers and ranchers in business

Washington, D.C. -Idaho Senator Mike Crapo is working to ensure farmers and ranchers have access to modern and safe water infrastructure.  Senators Michael Bennet (D-Colorado) and Cory Gardner (R-Colorado) joined Crapo today to introduce the Water and Agriculture Tax Reform (WATER) Act, which seeks to reform outdated tax provisions that hinder investment in important infrastructure advances.

The bill would revise restrictions placed on mutual ditch and irrigation companies' ability to raise capital to invest in infrastructure.  These companies are mostly comprised of farmers who have formed cooperative corporations to maintain and develop water storage and delivery systems for farmland.  Current law dictates that mutual ditch and irrigation companies must receive 85 percent of their income from shareholder investment to maintain their non-profit designations.  The bill allows for these companies to receive other sources of income for operations and maintenance and still maintain non-profit status.  The legislation requires that the extra revenue be used exclusively for operations and maintenance of the ditch and irrigation company.

Currently, when ditch and irrigation companies incur a large capital expense, such as replacing a dam in disrepair, the companies are severely limited in how revenue can be collected.  This legislation eases restrictions while still ensuring that the revenue is used solely for operations and maintenance expenses.

"The high price of maintaining reservoirs, ditches and other irrigation structures comes at a great cost to Idaho farmers and ranchers," said Crapo.  "Many in the agriculture community form mutual ditch and irrigation companies to develop and maintain water storage and delivery systems for their land.  But, due to an outdated provision in our tax code, our farmers and ranchers end up being penalized for this very investment.  In order to maintain a thriving agriculture sector, we must fix this provision by passing the WATER Act."

"In the face of persistent drought conditions, water is an even more precious resource for Colorado's farmers and ranchers," Bennet said. "Producers face challenges when it comes to distributing water across their land to keep it productive for agricultural uses. This bill updates the tax code to help Colorado's ditch and irrigation businesses keep this infrastructure in good working condition."

"Mutual ditch, irrigation, and water companies play a critical role in agriculture, and in Western agriculture in particular," Gardner said. "They allow farmers, ranchers, and others to form collaborative corporate entities to install and maintain vital irrigation infrastructure. Unfortunately, our outdated tax laws risk holding back the agriculture industry's ability to innovate and make needed improvements. Many in the agriculture industry, for example, are looking to make improvements to water efficiency. But currently, if a mutual irrigation company spends too much money on efficiency improvements, it risks losing its tax-exempt status. These are outdated portions of our tax code, and they're overdue for modernization. I'm proud to co-sponsor this legislation, and I'll work hard to make sure it passes."