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Updated March 22, 2024
Bureau of Reclamation Funding in the Inflation Reduction Act
(P.L. 117-169)
In August 2022, Congress enacted P.L. 117-169, popularly
Reclamation updates on IRA implementation have been
known as the Inflation Reduction Act (IRA). Among its
compiled on Reclamation’s IRA website and in the January
funding provisions, the law provided approximately $4.6
2023 White House IRA guidebook. The remainder of this
billion in mandatory appropriations for four new authorities
In Focus discusses Reclamation IRA funding for each of
of the Bureau of Reclamation (Reclamation, part of the
the four authorities receiving funds.
Department of the Interior). IRA mandatory appropriations
are available from FY2022 through FY2026 or FY2031
Drought Mitigation
(depending on the provision). The majority of IRA funding
Section 50233 of the IRA provided $4.00 billion in funding,
is for drought mitigation in Reclamation States and
available through FY2026, to mitigate drought in the 17
territories, with priority given to the Colorado River and
semiarid western Reclamation States (as authorized in the
areas experiencing “long-term drought.”
Reclamation Act of 1902). Reclamation is to make this
funding available to public entities and Indian tribes in the
Congress provided Reclamation’s IRA funding in addition
form of grants, contracts, or financial assistance
to another major emergency supplemental appropriation,
agreements. Congress also specified that priority for these
the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-
funds shall be provided to the Colorado River Basin and
58), enacted in November 2021. For its part, the IIJA
other areas experiencing comparable “long-term drought.”
included $8.3 billion in mandatory emergency supplemental
Congress specified several potential uses of these funds:
appropriations for Reclamation, in equal installments from
FY2022 to FY2026. The IIJA provided funding for 13 new
1. Compensation for a temporary or
and existing Reclamation authorities (Figure 1).
multiyear voluntary reduction in
diversion of water or consumptive water
Figure 1. Bureau of Reclamation Funding in the
use.
Inflation Reduction Act (P.L. 117-169) and
2. Voluntary system conservation projects
Infrastructure Investment and Jobs Act (P.L. 117-58)
that achieve verifiable reductions in use
of or demand for water supplies or
provide environmental benefits in the
Lower Basin or Upper Basin of the
Colorado River.
3. Ecosystem and habitat restoration
projects to address issues directly caused
by drought in a river basin or inland water
body.
Colorado River Basin System Conservation and
Efficiency Program
Reclamation has announced several programs in the
Colorado River Basin to be funded by Section 50233
(Table 1). In October 2022, the bureau announced a new
program, the Lower Colorado River Basin System
Conservation and Efficiency Program, that expands on
previous pilots of this concept. The first component
(referred to as Component 1a) is to pay Colorado River or
Central Arizona Project (CAP) water delivery contract or
entitlement holders a set amount per acre-foot (AF) over the
next one to three years for efforts that are to result in
additional water in Lake Mead. Under the program, one-
year agreements receive $330 per AF, two-year agreements
receive $365 per AF, and three-year agreements receive
Source: CRS, based on P.L. 117-169 and P.L. 117-58.
$400 per AF. Reclamation also announced a separate
Notes: IRA = Inflation Reduction Act; IIJA = Infrastructure
component for short-term, consumptive use reduction
Investment and Jobs Act; m = millions; CO River = Colorado River;
agreements proposed by contractors (Component 1b). As of
DCP = drought contingency plan.
March 2024, 24 conservation agreements across California
https://crsreports.congress.gov
Bureau of Reclamation Funding in the Inflation Reduction Act (P.L. 117-169)
(6) and Arizona (18) were expected to conserve up to 1.58
Disadvantaged Community Domestic
million AF of water through 2026. These agreements are
Water Supply Projects
based on up to $670.2 million in IRA funding.
Section 50231 of the IRA contained $550.0 million,
available through FY2031, for Reclamation to provide up to
Table 1. Lower Colorado River Basin Conservation
100% of the cost for the planning, design, and/or
and Efficiency Program
construction of water projects where the primary purpose is
Potential Payments to Contract Holders
to provide domestic water supplies to disadvantaged
communities or households. Pursuant to this authority,
Funding
Reclamation is to establish and adopt criteria to identify
($ per
applicable disadvantaged communities or households in a
Component
Description (Term)
AF)
Reclamation State or Territory that do not have reliable
access to domestic water supplies (43 U.S.C. §391). The
1a
Set price agreements (one year)
$330/AF
funding mechanism may be via grants, contracts, or
1a
Set price agreements (two years)
$365/AF
financial assistance agreements at a cost share determined
by the Commissioner. In May 2023, Reclamation
1a
Set price agreements (three years) $400/AF
announced $5.5 million available to the U.S. territories of
American Samoa, Guam, the Commonwealth of the
1b
Consumptive use reduction
Varies
Northern Mariana Islands, and the U.S. Virgin Islands for
agreements
projects to provide domestic water supplies to communities
2
Contractor-proposed long-term
TBA
that do not have reliable access to potable water. Using the
agreements
Section 50231 authority, Reclamation also anticipates
supporting eligible proposals for WaterSMART Planning
Source: CRS, based on information from the Bureau of Reclamation,
and Project Design Grants and the WaterSMART Drought
at https://www.usbr.gov/lc/LCBConservation.html.
Resiliency Projects at above the usual 50% federal cost
Note: TBA = to be announced; AF = acre-foot.
share. In September 2023, Reclamation testified that it was
developing a program for the majority of Section 50231
Reclamation has also announced a program component for
funding.
long-term, contractor-proposed water conservation
agreements. It would similarly pay Lower Colorado River
Solar Canal Improvements
Basin contractors a set price per AF for consumptive use
Section 50232 of the IRA contained $25.0 million,
reduction, based on contractor-proposed prices, duration,
available through FY2031, for the design, study, and
and verification methodologies. Contractors must provide
implementation of pilot projects that would cover water
economic justifications for their terms, which are to be
conveyance facilities with solar panels. They may have
reviewed and finalized by Reclamation. This announcement
potential to meet dual goals of reducing evaporative losses
closed in August 2023, and no awards have been
and generating electricity. To date, these projects have not
announced.
been implemented on a large scale in the United States.
Reclamation announced its first award of this funding, for
Reclamation has announced other Colorado River
$5.65 million, in December 2023.
allocations for this funding, including $250 million in
November 2022 for Salton Sea restoration and $500 million
Emergency Drought Relief for Tribes
for system conservation efforts in the Upper Colorado River
Section 80004 of the IRA included $12.5 million, available
Basin. Reclamation has also stated that it will develop
through FY2026, for near-term relief actions to mitigate
programs for this funding to help mitigate the effects of
drought for Indian tribes “impacted by the operation of a
drought in other Reclamation river basins.
Reclamation project.” Congress authorized Reclamation to
make available funds in the form of direct financial
Funding under this section of the IRA would supplement
assistance to (1) address drinking water shortages and (2)
other Reclamation funding to mitigate drought in the
mitigate the loss of tribal trust resources, with no cost share
Colorado River Basin, including funding available in the
required. Reclamation issued its first solicitation for this
IIJA and through annual appropriations. To date, it is the
funding in December 2023 through its Native American
only instance of funding for Reclamation contractors to
Affairs Technical Assistance Program.
forgo deliveries of federally delivered water. It is unclear
whether the approach of paying contractors to forgo water
deliveries will entail additional funding beyond that
Charles V. Stern, Specialist in Natural Resources Policy
appropriated in the IRA. For more information on Colorado
Anna E. Normand, Specialist in Natural Resources Policy
River drought mitigation, see CRS Report R45546,
IF12437
Management of the Colorado River: Water Allocations,
Drought, and the Federal Role.
https://crsreports.congress.gov
Bureau of Reclamation Funding in the Inflation Reduction Act (P.L. 117-169)
Disclaimer
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https://crsreports.congress.gov | IF12437 · VERSION 2 · UPDATED