Bureau of Reclamation Support for Water Storage Projects

The Bureau of Reclamation (Reclamation, part of the Department of the Interior) has for more than a century been involved in the construction and operations of water storage projects in the 17 arid and semiarid western states. In the past, Congress generally provided full, up-front funding for the construction of these projects through discretionary and supplemental appropriations to Reclamation, and project beneficiaries (e.g., irrigators, municipal water suppliers, and hydropower contractors) generally repaid their portion of project costs over a 40- to 50-year term. Since the 1970s, Reclamation has built few new projects under its traditional authorities, but in recent years, Congress has added new authorities for Reclamation to support water storage construction at various scales. In Section 4007 of the 2016 Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322), Congress enacted a new authority for Reclamation to fund the study and/or construction of new surface and groundwater storage projects. Under Section 4007, funding for water storage projects may be used for two primary project types: Federally owned storage projects are surface water or groundwater storage projects to which the United States holds title and that were authorized for construction pursuant to reclamation law and regulations. The federal government may fund up to 50% of the cost for these projects. State-led storage projects are surface water or groundwater storage projects to be constructed, operated, and maintained by states or political subdivisions. The federal government may fund up to 25% of the costs of these projects. To receive study or construction funding under this authority, the Secretary of the Interior first, among other requirements, recommends specific projects and funding levels to Congress, and Congress in turn decides whether to designate those projects by name in an enacted appropriations act. From 2018 to 2020, 13 projects received funding under the WIIN Act. Pursuant to the act, since January 2021, only projects that were recommended for construction prior to the end of 2020 have been eligible for ongoing Administration construction funding allocations under Section 4007. Overall, Congress has provided Reclamation more than $3.0 billion in funding for large water storage projects since FY2018, including more than $1.0 billion in funding for Section 4007 projects in annual discretionary appropriations through FY2026. Congress also has provided funding for these projects in supplemental appropriations. In the Infrastructure Investment and Jobs Act (IIJA, also referred to as the Bipartisan Infrastructure Law; P.L. 117-58), Congress provided Reclamation with $1.05 billion in funding for Section 4007 and other projects. In the 119th Congress, the FY2025 budget reconciliation law (P.L. 119-21, sometimes called the One Big Beautiful Bill Act) provided Reclamation with $1.0 billion for projects that enhance capacity at existing Reclamation surface water storage facilities. Unlike prior funds, this funding would not require reimbursement or cost sharing. Congress also enacted new authorities in the IIJA for Reclamation to provide grants that support the construction of “small” (i.e., less than 30,000 acre-feet), nonfederally owned surface and groundwater storage projects, and Reclamation has awarded IIJA funding under this authority. Reclamation also may support small water storage and conveyance projects that increase drought resiliency using grant authorities enacted in 2010 under P.L. 111-11. These drought resiliency projects are funded through Reclamation’s Drought Response Program. While the two programs target similar project types, their eligible recipients, maximum project costs, and federal cost-share requirements differ. In the 119th Congress, several bills (e.g., H.R. 6641, H.R. 338) would address Reclamation’s water storage authorities. Issues for Congress include whether to extend and/or amend expiring authorities, such as those enacted under the WIIN Act. Congress also may consider what levels of funding, if any, are adequate for these projects and what financing mechanisms to employ (e.g., appropriate cost shares, repayment). In addition, Congress may be interested in oversight of project allocations and planning for future surface water storage projects.