WASHINGTON, D.C. – U.S. Reps. Terri Sewell (AL-07) and Adrian Smith (NE-03) have introduced the Revitalizing Underdeveloped Rural Areas and Lands (RURAL) Act, legislation that would help preserve jobs and encourage infrastructure development by expanding tax-exempt cooperative organizations’ access to government grants and assistance, including rural broadband grants and FEMA disaster relief.

“Our rural communities depend on reliable infrastructure, access to broadband and secure energy sources for their local economies to thrive,” Rep. Terri Sewell said. “Alabama’s rural electric co-ops provide essential broadband services in rural areas where high-speed internet is limited but essential to those areas’ economic growth. We must do more to provide high-speed internet – and the opportunities and resources that it brings – to the 22.4 million Americans living in rural parts of our country without quality internet access. The RURAL Act would ensure that these co-ops can retain their tax-exempt status when applying for grants to expand rural broadband or disaster assistance and provide these co-ops with the ability to secure the grants needed to continue to grow their renewable energy, economic development and energy efficiency initiatives.”

“Nebraska has a long tradition of relying on public and cooperative power generation to affordably meet the needs of families, farmers, ranchers, and small businesses,” Rep. Adrian Smith said. “While continuing to ensure rural electric co-ops are largely funded by their membership as a condition of their tax-exempt status, we should also ensure funds received from grants or for pole usage do not affect their tax status.  Just as rural power generation and transmission were vital to rural economic growth in the 20th century, access to both power and broadband will drive our rural economies in the 21st.” 

“The legislation will enable electric cooperatives to continue powering rural communities across America,” said National Rural Electric Cooperative Association CEO Jim Matheson. “Without this legislation, co-ops risk losing their not-for-profit, tax-exempt status if they accept government grants for recovery from major storms or to expand rural broadband access and other services that are critical to the future of rural communities. I applaud Congresswoman Sewell’s leadership on this issue and encourage House members to join the sponsors in supporting this bill.”

“Rural Electric Cooperatives have historically received grants from various sources to assist in providing services to their members such as renewable energy development, energy efficiency and conservation and more recently helping to deploy vital broadband service to rural Alabama communities. Recent changes in the Revenue Code create an unintended consequence for cooperatives that may jeopardize their tax-exempt status,” said Alabama Rural Electric Association President and CEO Fred Braswell. “Representative Sewell understands the importance of this to rural Alabama and its citizens. We thank her for continuing to fight for programs to help the rural cooperatives and the areas we serve.”

“Crucial community infrastructure projects in central Alabama have materialized because Central Alabama Electric Cooperative (CAEC) has successfully obtained grants. Over the years these federal, state and local allocations have funded a rural wastewater system and new entry roads in county business parks. Congresswoman Terri Sewell has introduced the RURAL Act, which offers protection to electric cooperatives and other nonprofit organizations by allowing them to maintain certain tax exemptions. Without their not-for-profit status, electric cooperatives’ ability to pursue grants will be hampered by having to include additional costs in rates,” said Central Alabama Electric Cooperative President and CEO Tom Stackhouse. “Thank you, Congresswoman Sewell, for your leadership and diligence in sponsoring the RURAL Act. Continued protection will be essential for CAEC as we embark on our rural broadband project this year.” 

“As an electric cooperative that was severely impacted by Hurricane Michael in October 2018, HR 2174 will allow PowerSouth Energy Cooperative’s members to utilize FEMA grants without fear of losing our non-for-profit status,” said PowerSouth Energy Cooperative Vice President of External Affairs Horace Horn. “We are grateful for Rep. Sewell’s sponsorship of this legislation and look forward to working with her on this issue.”   

The RURAL Act would amend the Internal Revenue Code to ensure tax-exempt cooperative organizations do not lose their tax-exempt status when they apply for and use certain government grants, contributions and assistance, including rural broadband grants and FEMA disaster relief.

A Senate companion measure was introduced by Sens. Rob Portman (R-OH) and Tina Smith (D-MN).

The RURAL Act is available here.