Bureau of Reclamation Funding in the Inflation Reduction Act (P.L. 117-169)

Bureau of Reclamation Funding in the Inflation Reduction Act (P.L. 117-169)

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Updated May 15, 2024
Bureau of Reclamation Funding in the Inflation Reduction Act
(P.L. 117-169)
In August 2022, Congress enacted P.L. 117-169, popularly
Updates on Reclamation’s 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
• Compensation for a temporary or multiyear voluntary
and existing Reclamation authorities (Figure 1).
reduction in diversion of water or consumptive water
use.
Figure 1. Bureau of Reclamation Funding in the
Inflation Reduction Act (P.L. 117-169) and
• Voluntary system conservation projects that achieve
Infrastructure Investment and Jobs Act (P.L. 117-58)
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.
• 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
$400 per AF. Reclamation also announced a separate

component for short-term, consumptive use reduction
Source: CRS, based on P.L. 117-169 and P.L. 117-58.
agreements proposed by contractors (Component 1b). As of
Notes: IRA = Inflation Reduction Act; IIJA = Infrastructure
March 2024, 24 conservation agreements across California
Investment and Jobs Act; m = mil ions; CO River = Colorado River;
(6) and Arizona (18) were expected to conserve up to 1.58
DCP = drought contingency plan.
million AF of water through 2026. These agreements are
based on up to $670.2 million in IRA funding.
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Bureau of Reclamation Funding in the Inflation Reduction Act (P.L. 117-169)
Table 1. Lower Colorado River Basin Conservation
Disadvantaged Community Domestic
and Efficiency Program
Water Supply Projects
Potential Payments to Contract Holders
Section 50231 of the IRA contained $550.0 million,
available through FY2031, for Reclamation to provide up to
Funding
100% of the cost for the planning, design, and/or
($ per
construction of water projects where the primary purpose is
Component
Description (Term)
AF)
to provide domestic water supplies to disadvantaged
communities or households. Pursuant to this authority,
1a
Set price agreements (one-three
$330-
Reclamation is to establish and adopt criteria to identify
years)
400/AF
applicable disadvantaged communities or households in a
1b
User-proposed consumptive use
Varies
Reclamation State or Territory that do not have reliable
reduction agreements
access to domestic water supplies (43 U.S.C. §391). The
funding mechanism may be via grants, contracts, or
2
Contractor-proposed “long-term” TBA
financial assistance agreements at a cost share determined
agreements
by the Commissioner. In May 2023, Reclamation
Source: CRS, based on information from the Bureau of Reclamation,
announced $5.5 million available to the U.S. territories of
at https://www.usbr.gov/lc/LCBConservation.html.
American Samoa, Guam, the Commonwealth of the
Note: TBA = to be announced; AF = acre-foot.
Northern Mariana Islands, and the U.S. Virgin Islands for
projects to provide domestic water supplies to communities
Reclamation has also announced a program component for
that do not have reliable access to potable water. Using the
long-term, contractor-proposed water conservation
Section 50231 authority, Reclamation announced that $320
agreements. It would similarly pay Lower Colorado River
million is available to assist tribes under a new Tribal
Basin contractors a set price per AF for consumptive use
Domestic Water Supplies Program. Funding is limited to up
reduction, based on contractor-proposed prices, duration,
to $3 million for planning studies, up to $5 million for
and verification methodologies. Contractors must provide
design projects, and up to $50 million for construction
economic justifications for their terms, which are to be
projects. Reclamation also supported eligible proposals for
reviewed and finalized by Reclamation.
WaterSMART Planning and Project Design Grants and the
WaterSMART Drought Resiliency Projects in FY2024 at
Reclamation has announced other Colorado River
above the usual 50% federal cost share. Reclamation has
allocations for this funding, including $250 million in
stated that it continues to evaluate other funding options to
November 2022 for Salton Sea restoration and $500 million
implement Section 50231.
for system conservation efforts in the Upper Colorado River
Solar Canal Improvements
Basin.
Section 50232 of the IRA provided Reclamation with $25.0
Drought in Other Western River Basins
million, available through FY2031, for the design, study,
Reclamation has noted its intent to use some of its IRA
and implementation of pilot projects that would cover water
drought funding on programs to mitigate drought in other
conveyance facilities with solar panels. They may have
(i.e., non-Colorado River) reclamation river basins, in
potential to meet dual goals of reducing evaporative losses
accordance with the act. In the fall of 2023, Reclamation
and generating electricity. To date, these projects have not
requested stakeholder input on the types and nature of
been implemented on a large scale in the United States.
projects that could be funded in these areas. Reclamation
Reclamation announced awards of $5.65 million in
began to award some of this funding in FY2024.
December 2023 and $19 million in April 2024 for this
funding.
Funding under this section of the IRA is expected to
Emergency Drought Relief for Tribes
supplement other Reclamation funding available in the IIJA
and through annual appropriations to mitigate drought. It is
Section 80004 of the IRA included $12.5 million, available
unclear whether some of the efforts funded under the
through FY2026, for near-term relief actions to mitigate
legislation, such as the approach of paying contractors to
drought for Indian tribes “impacted by the operation of a
forgo water deliveries, will entail additional funding
Reclamation project.” Congress authorized Reclamation to
commitments beyond the IRA. For more information on
make available funds in the form of direct financial
Colorado River drought mitigation, see CRS Report
assistance to (1) address drinking water shortages and (2)
R45546, Management of the Colorado River: Water
mitigate the loss of tribal trust resources, with no cost share
Allocations, Drought, and the Federal Role. For more
required. Reclamation issued its first solicitation for this
information on federal drought mitigation in general, see
funding in December 2023 through its Native American
CRS Report R46911, Drought in the United States:
Affairs Technical Assistance Program.
Science, Policy, and Selected Federal Authorities
Charles V. Stern, Specialist in Natural Resources Policy
Anna E. Normand, Specialist in Natural Resources Policy
IF12437

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Bureau of Reclamation Funding in the Inflation Reduction Act (P.L. 117-169)

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