II 

117TH CONGRESS 

1ST SESSION S. 2383 

To amend the Internal Revenue Code of 1986 to facilitate water leasing 

and water transfers to promote conservation and efficiency. 

IN THE SENATE OF THE UNITED STATES 

JULY 20, 2021 

Mr. CRAPO (for himself, Mr. BENNET, Mr. RISCH, and Ms. LUMMIS) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to facilitate 

water leasing and water transfers to promote conservation and efficiency. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Water and Agriculture 

5 Tax Reform Act of 2021’’. 


kjohnson on DSK79L0C42PROD with BILLS
2 

•S 2383 IS

1 SEC. 2. FACILITATE WATER LEASING AND WATER TRANS2 FERS TO PROMOTE CONSERVATION AND EF3 FICIENCY. 

4 (a) IN GENERAL.—Paragraph (12) of section 501(c) 

5 of the Internal Revenue Code of 1986 is amended by add6 ing at the end the following new subparagraph: 

7 ‘‘(K) TREATMENT OF MUTUAL DITCH IRRI8 GATION COMPANIES.— 

9 ‘‘(i) IN GENERAL.—In the case of a 

10 mutual ditch or irrigation company or of a 

11 like organization to a mutual ditch or irri12 gation company, subparagraph (A) shall be 

13 applied without taking into account— 

14 ‘‘(I) any income received or ac15 crued from the sale, lease, or ex16 change of fee or other interests in real 

17 and personal property, including inter18 ests in water (other than income de19 rived from the sale, lease, or transfer 

20 of water to nonmembers outside the 

21 river basin or basins within which the 

22 mutual ditch or irrigation company 

23 operates), 

24 ‘‘(II) any income received or ac25 crued from the sale or exchange of 

26 stock in a mutual ditch or irrigation 


kjohnson on DSK79L0C42PROD with BILLS
3 

•S 2383 IS

1 company (or in a like organization to 

2 a mutual ditch or irrigation company) 

3 or contract rights for the delivery or 

4 use of water, or 

5 ‘‘(III) any income received or ac6 crued from the investment of income 

7 described in subclause (I) or (II), 

8 except that any income described in sub9 clause (I), (II), or (III) which is distrib10 uted or expended for expenses (other than 

11 for operations, maintenance, and capital 

12 improvements) of the mutual ditch or irri13 gation company or of the like organization 

14 to a mutual ditch or irrigation company 

15 (as the case may be) shall be treated as 

16 nonmember income in the year in which it 

17 is distributed or expended. For purposes of 

18 the preceding sentence, expenses (other 

19 than for operations, maintenance, and cap20 ital improvements) include expenses for the 

21 construction of conveyances designed to de22 liver water outside of the system of the 

23 mutual ditch or irrigation company or of 

24 the like organization. 


kjohnson on DSK79L0C42PROD with BILLS
4 

•S 2383 IS

1 ‘‘(ii) TREATMENT OF ORGANIZA2 TIONAL GOVERNANCE.—In the case of a 

3 mutual ditch or irrigation company or of a 

4 like organization to a mutual ditch or irri5 gation company, where State law provides 

6 that such a company or organization may 

7 be organized in a manner that permits vot8 ing on a basis which is pro rata to share 

9 ownership on corporate governance mat10 ters, subparagraph (A) shall be applied 

11 without taking into account whether its 

12 member shareholders have one vote on cor13 porate governance matters per share held 

14 in the corporation. Nothing in this clause 

15 shall be construed to create any inference 

16 about the requirements of this subsection 

17 for companies or organizations not in18 cluded in this clause.’’. 

19 (b) EFFECTIVE DATE.—The amendment made by 

20 subsection (a) shall apply to taxable years beginning after 

21 the date of the enactment of this Act. 

Æ 


kjohnson on DSK79L0C42PROD with BILLS