Updated November 8, 2018
Reclamation Water Storage Projects: Section 4007 of the Water
Infrastructure Improvements for the Nation Act
Section 4007 of the Water Infrastructure Improvements for
Funding for water storage project construction under
the Nation Act (WIIN Act; P.L. 114-322), enacted in
Section 4007 is available for two primary project types:
December 2016, created a new authority for the Bureau of
Reclamation (Reclamation, part of the Department of the
1. “Federally-owned storage projects,”
Interior) to build water storage projects in the western
defined to be any project to which the
United States. Reclamation has since used this authority to
United States holds title and which was
further progress on a number of water storage projects and,
authorized to be constructed pursuant to
as of late 2018, Congress had appropriated the full $335
Reclamation’s laws and regulations. The
million in available budget authority. Some federal and
federal cost share for these projects is
state decisionmakers, local stakeholders, and advocacy
limited to no more than 50%.
groups are interested in extending the authority to make
2. “State-led” storage projects, defined to be
additional headway on water storage projects in the west.
groundwater or surface water storage
Others oppose federal funding for new water storage
projects constructed, operated, and
projects, in particular those in environmentally sensitive
maintained by states or political
areas. Additionally, some have expressed concern that the
subdivisions that are found to have a
new approach may result in nonfederal interests (especially
federal benefit in accordance with
those with access to capital) driving the portfolio of projects
reclamation laws. The federal cost share
receiving federal investment.
for these projects is limited to no more
Background
than 25%.
For federal participation in a project under either
In the early and mid-20th century, Reclamation built
designation, the Secretary of the Interior must find that the
hundreds of large dams and water diversion structures
project is feasible and provides federal benefits
throughout the west. Traditionally, Reclamation’s role in
proportionate to the federal government’s cost share (i.e., a
these project’s development has been limited to
project providing 50% federal support appears to require
geographically specific projects authorized in federal
that 50% of its benefits be federal in nature, wheras a
statute. Typically, the federal government, through
project providing 25% must have 25% federal benefits).
discretionary appropriations to Reclamation, has provided
After the Secretary’s recommended projects have been
full, up-front funding for the construction costs of these
transmitted to Congress, the project must be designated by
facilities. Project beneficiaries, which are irrigation water,
name in appropriations acts. Project sponsors also must
municipal water, and hydropower contractors, repay their
agree to pay their portion of project costs up front (i.e., at
portion of project construction or development costs over a
the time of construction).
40-50 year term. The amount recouped by the federal
government typically depends on several factors, including
Differences from Traditional
contractors’ ability to pay and the portion of project
Reclamation Water Storage
benefits that are nonreimbursable because they are
Construction Process
considered federal in nature (e.g., fish and wildlife
The Section 4007 water storage authority does not eliminate
enhancements, flood control, recreation). Additionally,
the traditional Reclamation project approval and finance
some beneficiaries, such as irrigators, are not charged
process as a path to new project construction. However, it
interest on their repayment obligations. Coupled with the
does contrast with that process. Instead of full, up-front
aforementioned nonreimbursable costs, the total amount
federal financing for new projects (to be repaid over time),
repaid to the federal government for these projects is
Section 4007 authorizes partial up-front federal funding for
typically less than the full cost of construction.
new federal and state-led projects in the amounts of 50%
Section 4007 of the WIIN Act
and 25%, respectively. Proponents of these changes argue
they will stretch scarce federal funds and provide increased
Section 4007 of the WIIN Act authorized a new structure
incentive for local involvement in storage projects. At the
for Reclamation to support water storage infrastructure
same time, in requiring a large initial cost share from
projects. The bill authorized $335 million in discretionary
nonfederal users, those who cannot afford the up-front,
appropriations for new and improved federal and
lump-sum payments required in the legislation may be
nonfederal water storage projects. Any appropriated funds
deterred from pursuing projects that otherwise might have
are to be made available for qualifying water storage
moved forward under the traditional project-finance model.
projects approved for construction prior to January 1, 2021
Thus, the Section 4007 authority appears to be most
(see below discussion).
attractive to those with access to the requisite capital.
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link to page 2 Reclamation Water Storage Projects: Section 4007 of the Water Infrastructure Improvements for the Nation Act
The new authority also altered the role of authorizing and
Table 1. Reclamation Section 4007 Water Storage
appropriations committees. Some in Congress have
Projects
expressed concerns that Section 4007 gives tacit approval
Projects funded as of November 2018
for Reclamation to move forward with construction without
a high level of input from its congressional authorizing
FY2017
committees—the House Natural Resources Committee and
Project (State)
Phase
Funding
the Senate Energy and Natural Resources Committee.
Notably, in the traditional Reclamation project-
Shasta Dam and Reservoir Design, Pre-
$20 million
development process, there is no statutory requirement for
Enlargement Project (CA)
construction
explicit approval of Reclamation construction projects by
North-of-Delta Offstream Study
$4.35
the authorizing committees; such a requirement exists only
Storage Investigation/Sites
million
for studies (16 U.S.C. §460l-19). However, in practice,
Reservoir Storage Project
most projects have received an explicit statutory
(CA)
authorization for construction before obtaining construction
appropriations from Congress. Section 4007 allows for a
Upper San Joaquin River
Study
$1.5 million
final decision approving construction of projects to be made
Basin Storage
as part of the appropriations process, so long as the
Investigation (CA)
section’s other eligibility requirements (e.g., secretarial
Friant-Kern Canal
Study
$2.2 million
recommendation, federal project costs are commensurate
Subsidence Challenges
with federal benefits) are met. Thus, although Section 4007
Project (CA)
may bypass the authorizing committees for some decisions
related to new project construction (theoretically removing
Boise River Basin
Study
$750,000
one hurdle of project development), it also adds additional
Feasibility Study (ID)
requirements that must be met before a project can receive
Yakima River Basin Water Construction
$2 million
federal appropriations.
Enhancement Project—
Cle Elum Pool Raise
Only projects approved prior to the beginning of 2021 are
(WA)
eligible for federal funding under Section 4007. Thus,
although the section technically represents a new authority
Upper Yakima System
Study
$2.5 million
for construction projects, the projects most likely to benefit
Storage Feasibility Study
are those that already had been under study.
(WA)
Implementation
Source: Bureau of Reclamation, Report to House and Senate
Committees on Appropriations, January 2018.
Reclamation received funding for Section 4007 projects in
enacted Energy and Water Development appropriations acts
Most of the projects under study have yet to be formally
for FY2017 ($67 million), FY2018 ($134 million), and
recommended for construction and would require additional
FY2019 ($134 million). This means that as of FY2019, the
funds to proceed in that phase. Thus, while authority has
full $335 million ceiling authorized for Section 4007 has
been used to move forward several projects, an increase in
been appropriated. Reclamation has allocated only $33.3
the appropriations ceiling likely would be required to
million of FY2017 funding for specific projects, with no
complete these projects. Some projects, such as the Shasta
other funding allocations announced as of late 2018. In a
Dam and Reservoir Enlargement Project, are controversial
January 2018 report to the House and Senate appropriations
and have been opposed by some interests at the local and/or
committees, Reclamation expressed its intent to use the
state level; others are less controversial. It is expected that
FY2017 funding on the following seven projects (Table 1).
in the future, Reclamation will detail the allocation of
Congress subsequently approved these projects in enacted
remaining Section 4007 appropriations, as well as what
appropriations for FY2018.
“type” of 4007 project (i.e., federal or state-led) might be
expected at specific locations. Similar to the FY2017

funding, Congress must approve those recommendations
through appropriations acts.

Section 4007 has yet to be implemented to complete

construction of any projects, and it is unclear which of the
current ongoing projects will be federal or state-led. If the

state-led option eventually became prominent, the result
might be a full or partial recasting of the federal role in
water storage project construction, perhaps to something
similar to a grant-making agency or an investor.
Charles V. Stern, Specialist in Natural Resources Policy
IF10626

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Reclamation Water Storage Projects: Section 4007 of the Water Infrastructure Improvements for the Nation Act



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https://crsreports.congress.gov | IF10626 · VERSION 3 · UPDATED

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