Contents

• Introduction
• Section 4007 of the WIIN Act
• IIJA Authorities and Funding for Water Storage Projects
• Funding and Recent Project Allocations
• Other Water Storage Project Authorities
• Small Water Storage Project Grants
• Drought Resiliency Projects
• Geographically Specific Authorities
• Issues for Congress
• Authorization Proposals
• Funding and Implementation

Summary

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 surface 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 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. Congress provided more than $1.0 billion in funding for Section 4007 projects in annual discretionary appropriations through FY2026.

Congress has also provided funding for Section 4007 and other water storage and conveyance 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 119^th 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, the latter funding does not require nonfederal 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. Using grant authorities enacted in 2010 under P.L. 111-11, Reclamation has also supported small water storage and conveyance projects that increase drought resiliency. These projects are funded through Reclamation's Drought Response Program. While the two programs both have the ability to fund water storage projects, their eligible recipients, maximum project costs, and federal cost-share requirements differ.

In the 119^th Congress, several bills (e.g., H.R. 6641, H.R. 338, H.R. 9022) 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 may also 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.

Introduction

Traditionally, the role of the Bureau of Reclamation (Reclamation, part of the Department of the Interior that operates exclusively in the 17 western states) in water project development has been limited to geographically specific projects authorized in federal statutes that comprise reclamation law (i.e., federal law that applies to reclamation projects generally). For such projects, Congress generally provided full, up-front funding for the construction costs of these projects through discretionary appropriations to Reclamation. Project beneficiaries (e.g., irrigators, municipal water suppliers, and hydropower contractors) generally then repaid their portion of reimbursable project construction or development costs over a term of 40 to 50 years.

A number of events precipitated the gradual slowdown of Reclamation's construction program beginning in the 1970s, and the bureau has constructed few new Reclamation projects (most of them smaller in scale) since then. Instead, Congress has authorized other forms of support for water resources development, including rural water projects, grants to nonfederal entities for water efficiency and conservation efforts, and projects associated with authorized Indian water rights settlements.¹

In recent years, Congress has added new authorities and funding for Reclamation to support the construction of surface and groundwater storage projects. These new authorities have in many cases differed from the traditional approach of authorization and funding for geographically specific reclamation projects. In Section 4007 of the Water Infrastructure Improvements for the Nation Act (WIIN Act; P.L. 114-322), Congress added authority for Reclamation to support new and/or augmented surface and groundwater storage projects that bypasses the typical Reclamation study and authorization process. The authority has been regularly funded in annual discretionary appropriations acts since FY2018. Congress has also funded Section 4007 projects and other water storage and conveyance projects in supplemental appropriations. In the Infrastructure Investment and Jobs Act (IIJA, also referred to as the Bipartisan Infrastructure Law [BIL]; P.L. 117-58) and the FY2025 budget reconciliation law (P.L. 119-21, sometimes called the One Big Beautiful Bill Act), Congress expanded Reclamation's authorities and provided it with additional funding for Section 4007 projects and has also allowed this funding to be used to support projects outside of the 4007 process. Congress has also enacted several grant authorities for Reclamation that support the construction of small, nonfederal surface and groundwater storage projects that have been funded in regular and supplemental appropriations. These smaller projects are typically funded through the Small Water Storage Project grant program and the Drought Response Program.

This report discusses Reclamation's major authorities to support water storage and conveyance project construction efforts.

Section 4007 of the WIIN Act

In 2016, Congress enacted the WIIN Act. Section 4007 of the act created a new authority for Reclamation to support surface and groundwater storage projects, and authorized a total of $335 million in discretionary appropriations for this purpose. Under Section 4007, funding for water storage projects is available for two primary project types:

• Federally owned storage projects are projects involving surface water or groundwater 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 projects involving surface water or groundwater 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.

Funding allocated under the WIIN Act may be used for studies and construction. Before projects can begin construction under Section 4007, several milestones must be met. To recommend a project for construction, the Secretary of the Interior must find that the project is feasible (either by authorizing a federal feasibility study or by approving a nonfederal study) and provides benefits proportionate to the federal government's cost share. In addition, project sponsors must agree to pay their portion of project costs up front. Appropriations under Section 4007 are available only after the Secretary transmits a list of recommended projects and funding levels to Congress and Congress approves those projects by name in an enacted appropriations act (Figure 1).

Figure 1. Process for Section 4007 Water Storage Project Funding Allocations

Source: Congressional Research Service.

In the WIIN Act, Congress stipulated that in order for projects to move forward with construction, the Secretary must have found them feasible by January 1, 2021.² As a result, only a subset of studies that were initially funded under this authority are currently eligible for construction funding. Altogether, 8 of the 13 projects that received feasibility study funding between 2018 and 2020 under the WIIN Act's authority were found feasible prior to the act's January 1, 2021, deadline. These projects continue to be eligible for ongoing construction funding.

Section 4007 is notable for its contrast with traditional Reclamation financing. Instead of full, up-front federal financing for federal projects as has traditionally been provided, Section 4007 provides for 50% funding for federal-led projects and 25% funding for state-led projects. Additionally, prior to enacting the WIIN Act, Congress had not authorized Reclamation to fund state-led water storage projects.

The WIIN Act's changes were also significant insofar as they allow water resources projects to move forward with construction without direct involvement of relevant congressional authorizing committees (i.e., the House Natural Resources Committee and the Senate Energy and Natural Resources Committee). Although there is no statutory requirement for explicit approval of Reclamation construction projects by these committees, in practice, these projects have previously received approval from the authorizing committees for construction before obtaining appropriations for this purpose. Section 4007 moved the onus of project approval to the appropriators and increased the number of requirements that must be met during the appropriations process. Although Section 4007 decreased traditional congressional involvement in new project approval, Congress, through the appropriations committees, still has to approve new projects before they can move forward. Additionally, although Section 4007 represents a new authority for construction projects, only a limited pool of projects are eligible for this support (i.e., projects approved before 2021), and Reclamation project authorization and finance continues to be an option for construction of new projects.

IIJA Authorities and Funding for Water Storage Projects

In the IIJA (also referred to as the BIL; P.L. 117-58), Congress expanded the water storage project authority of the WIIN Act. In Section 40901 of the IIJA, Congress authorized a total of $1.05 billion for water storage projects through FY2026. In Section 40902(a)(1)(A) of the IIJA, Congress provided that three kinds of feasibility studies are eligible for funding authorized under Section 40901:

• feasibility studies authorized by Congress by the date of the IIJA's enactment,
• feasibility studies with funding approved under Section 4007 of the WIIN Act, and
• the Verde Reservoirs Sediment Mitigation Project (AZ) and the Tualatin River Basin Project (OR).

Similarly to the IIJA's approach for feasibility studies, in Section 40902(a)(2) of the act, Congress provided that one or more criteria must be met for a project to be eligible for construction funding authorized under Section 40901. Specifically, a project will be eligible for IIJA construction funding if any of the following has occurred as of the date of the IIJA's enactment:

• an act of Congress authorized construction funding for the project;
• Congress approved construction funding under Section 4007 of the WIIN Act;³ or
• Congress approved feasibility study funding for a project, as detailed above, provided that the Secretary of the Interior finds that the project is technically and financially feasible, that sufficient nonfederal funding is available for the nonfederal cost share, and that the project is in the public interest and recommended by the Secretary of the Interior for construction.

Thus, Reclamation has in recent years supported these projects with two related authorities: a permanent authority to construct (or support the construction of) the eight facilities that met the WIIN Act's deadline of a positive feasibility study finding by January 1, 2021, and a time-limited authority to fund studies and construction projects that meet the IIJA requirements through FY2026.

Funding and Recent Project Allocations

From FY2017 to FY2026, Congress appropriated $1.051 billion for Section 4007 projects in annual Energy and Water Development appropriations acts, with approved annual funding ranging from $62.5 million to $134 million.⁴ Reclamation has transmitted eight rounds of recommended project allocations for these funds that, after congressional approval, released $998 million in prior-year appropriations to 13 projects: 10 in California, two in Washington, and one in Idaho.

Congress has also appropriated supplemental funding to Reclamation to support western water storage and conveyance projects, with a large share of this funding going to Section 4007 projects. In contrast to annual discretionary funding, these supplemental project allocations did not require additional congressional action to release funds to projects. In Division J of the IIJA, Congress appropriated $1.05 billion over five years (FY2022-FY2026) for water storage projects.⁵ Reclamation allocated this funding in annual IIJA work plans and addendums for FY2022-FY2025.⁶ These allocations supplemented many of the same Section 4007 projects that were being funded for construction in annual discretionary appropriations during this time, in particular Sites Reservoir Storage Project ($257 million in IIJA funding) and B. F. Sisk Dam Raise and Reservoir Expansion ($235 million in IIJA funding). Reclamation also directed some IIJA water storage funds toward a feasibility study for one Section 4007 project (Upper Yakima System Storage Feasibility Study), allocated funding for the construction of a previously authorized non–Section 4007 water storage and conveyance project (the Arkansas Valley Conduit in Colorado),⁷ and funded a non-Section 4007 project that satisfied other criteria established for water storage project funding under the IIJA (the Verde Reservoirs Sediment Mitigation Project).

In the FY2025 budget reconciliation law (P.L. 119-21, sometimes called the One Big Beautiful Bill Act, OBBBA), Congress approved another $1.0 billion for Reclamation for projects that "increase the capacity at existing Reclamation surface water storage or conveyance facilities," without other limitations.⁸ This funding was not limited to Section 4007 projects. In March 2026, Reclamation allocated $889 million of this funding, with approximately half going to two Section 4007 projects—Delta Mendota Canal Subsidence Correct ($235 million) and Shasta Dam and Reservoir Enlargement Project ($40 million)—and half going to eight other geographically specific projects that are not authorized under Section 4007.⁹ Notably, in OBBBA, Congress stipulated that this funding would not be subject to nonfederal reimbursement or cost sharing (i.e., typically required for Reclamation projects). Section 4007 projects and recent funding by source are detailed further below in Figure 2.

Figure 2. Bureau of Reclamation Section 4007 Projects: Recent Funding by Source FY2018-FY2026 Funding ($Millions)

Sources: Discretionary allocations based on Bureau of Reclamation letters to Congress from 2018 to 2025. IIJA allocations based on FY2022-FY2025 Reclamation IIJA work plan addendums. OBBBA allocations based on Reclamation, "Interior Announces $889 Million Investment in Western Water Infrastructure Through President Trump's One Big Beautiful Bill," press release, March 17, 2026. Notes: IIJA= Infrastructure Investment and Jobs Act (P.L. 117-58); OBBBA= One Big Beautiful Bill Act (P.L. 119-21); Discretionary= annual discretionary funding. * indicates projects recommended for construction under Section 4007 of the Water Infrastructure Improvements for the Nation Act (P.L. 114-322) prior to the legislation's feasibility study eligibility deadline of January 1, 2021, and are thus available for ongoing construction funding.

Other Water Storage Project Authorities

Congress has also authorized Reclamation to fund smaller, nonfederally owned water storage projects of a more limited scale. Some of these authorities are discussed below.

Small Water Storage Project Grants

In Section 40903 of the IIJA, Congress directed the Secretary of the Interior to establish a new competitive grant program for small water storage projects, which are allocated $100 million of the total water storage funding authorized under Section 40901 (see previous section, "IIJA Authorities and Funding for Water Storage Projects"). Congress appropriated this funding over five years (FY2022-FY2026) in Division J of the act.

Congress defined eligible projects under this authority as those in the 17 western reclamation states, Hawaii, and Alaska (1) with water storage capacity of 200-30,000 acre-feet (AF) or (2) that convey water directly or indirectly from surface or groundwater storage. Federal costs under this section are to be either (1) no more than the lesser of 25% of the project's total costs or (2) $30 million.¹⁰ There is no maximum project cost under this authority. Eligible applicants for the authority include nonfederal entities such as state, regional, or local authorities; Indian tribes or tribal organizations; and entities such as a water district or water association with water delivery authority. To qualify for funding, the project sponsor's feasibility study must be approved by Reclamation.¹¹

Under the IIJA authority, Reclamation allocated a total of $98 million in IIJA appropriations to a newly created program, the Small Surface Water Storage and Groundwater Storage Program, from FY2023 to FY2026.¹² Early awards included $20 million in FY2023 funding for four projects with storage capacities ranging from 1,485 to 28,000 AF¹³ and $35 million in FY2024 funding for six projects with storage capacities ranging from 1,035 to 5,000 AF.¹⁴ The program did not receive annual discretionary appropriations during this time period.

Drought Resiliency Projects

Reclamation's Drought Response Program, a component of the Bureau's WaterSMART Program, has also been used to support construction of water storage projects of a limited scale, including nonfederal water storage projects and groundwater recharge and recovery projects that increase drought resiliency in drought-prone areas. These drought resiliency projects are authorized under the same authority as Reclamation's WaterSMART grant program.¹⁵ Under this authority, Reclamation may fund up to 50% of a project's costs, with maximum federal funding of $5 million per project and maximum total project costs of $10 million. However, the federal cost share for these projects can be up to 95%-100% for certain disadvantaged communities if funding is provided through the Inflation Reduction Act (IRA; P.L. 117-169).¹⁶ There are no other requirements pertaining to project size and scope under this authority.

Eligible recipients of drought resiliency project funding are similar to those eligible for funding under the Small Water Storage Program but also include projects in the U.S. Virgin Islands, Puerto Rico, and Guam, as well as nonprofit conservation groups who partner with an otherwise eligible entity in an authorized area. Previously, Reclamation has funded drought resiliency projects using both annual discretionary appropriations provided to the Drought Response Program, as well as by using a portion of WaterSMART grant funding appropriated under the IIJA.¹⁷ In addition to water storage projects, Reclamation has also funded other project types through this program, including water treatment, water recycling and reuse, groundwater recharge, and stormwater capture projects.

Geographically Specific Authorities

Reclamation has other authorities that it has used to support water storage projects in recent years. For instance, Congress has enacted targeted, geographically specific authorities (i.e., similar to the historic approach for Reclamation) that Reclamation has recently used to fund studies or construction on some water storage projects, such as the Arkansas Valley Conduit in Colorado (see previous section, "IIJA Authorities and Funding for Water Storage Projects"). Similarly, Congress has also authorized Reclamation to construct individual rural water projects, which are typically municipal projects to supply water to rural and/or tribal areas.¹⁸ Many of these projects include water storage and conveyance components. Reclamation has other project-specific authorities that it has used to construct water storage and conveyance projects, such as those pertaining to individual Indian water rights settlements.¹⁹ Detailed discussion of these other authorities is beyond the scope of this report.

Issues for Congress

Authorization Proposals

In the past, Congress has typically engaged with the Administration's recommendations for Section 4007 water storage construction projects in appropriations action, where projects must be approved by name in enacted legislation. While Congress has generally approved most prior WIIN Act project allocation recommendations, during the 116^th Congress, the Trump Administration's recommended allocations for one project (the Shasta Dam and Reservoir Enlargement Project) were not approved. Since 2021, Reclamation has continued to recommend funding allocations for construction projects that met the WIIN Act's feasibility determination deadline of January 1, 2021. The most recent WIIN Act construction allocations were approved in P.L. 119-74.

In recent Congresses, Members have proposed reauthorization and/or amendment of Section 4007, as well as other water storage-related authorities and processes for Reclamation. In the 119^th Congress, H.R. 9022, the FY2027 Energy and Water Development Appropriations Act, as reported by the House Appropriations Committee, would push back the sunset clause for Section 4007 project study approvals from December 31, 2020, to December 31, 2027. If enacted, this change would potentially allow for the approval of new studies pursuant to Section 4007. Separately, H.R. 6641, the Central Valley Water Solution Act, would, among other things, authorize Reclamation to provide financial and technical assistance for 22 individual surface and groundwater storage and conveyance projects throughout California at a total cost of approximately $4.4 billion. Some of these projects have previously received assistance under Section 4007.

Apart from Section 4007 authority for larger storage projects, Congress may also consider the status of the authority for the Small Water Storage Project grant program that was authorized in the IIJA, including whether to extend and/or amend this authority. It may also consider the status and mechanism for supporting drought resiliency projects (authorized under the Bureau's WaterSMART authorities)²⁰ and temporary cost-share authorities under the IRA. Demand for both programs and reconciling differences between the authorities (e.g., eligible entities, potential for cost-share waivers, project caps), could be drivers for future legislative interest in these programs. In the 119^th Congress, H.R. 338, the Every Drop Counts Act, would amend Reclamation's Small Water Storage Project Program authority to increase the cap for groundwater projects to 150,000 AF in annual capacity and would extend the program's authorization through November 2031.

Oversight of recent Administration funding allocations for individual projects, and the status of these projects, may also be of interest to Congress. This may include Reclamation's allocation of funds pursuant to P.L. 119-21 (OBBBA), including allocation of funds for projects that may be opposed by some (e.g., the Shasta Reservoir Enhancement Project in California), and allocation of remaining funds in the bill.

A related issue for congressional consideration may be the priority of Reclamation's groundwater storage activities. Traditionally, Reclamation financial support for water storage projects has mostly focused on surface water storage, while groundwater management and related projects have largely been a state or local issue.²¹ As nonfederal groundwater management projects have increased in recent years, Congress has added to Reclamation's authorities to also provide support for these activities. For example, Congress included under the Section 4007 authority the ability for Reclamation to support groundwater projects (i.e., in addition to surface water storage projects) and also authorized Reclamation to support nonfederal aquifer storage and recharge projects in IIJA.²² Reclamation has not made extensive use of either authority to date, but Congress funded the IIJA authority for the first time in FY2024 Energy and Water Development Appropriations (P.L. 118-42).

Funding and Implementation

Funding for Reclamation to study and construct water storage and conveyance projects has increased significantly over the past decade. As construction on projects continues across the West and recent influxes of supplemental funding are allocated and expended, stakeholders may ask Congress to enact new funding to complete these projects and start others. How and whether to make this funding available, and what (if any) changes and other requirements should accompany this funding, are likely to be of interest to Congress.

Footnotes