This bill amends existing Reclamation and IIJA authorities to broaden federal support for water storage and nature-based retention projects. It authorizes the Secretary of the Interior to provide financial assistance for storage projects within any Reclamation State, makes certain IIJA feasibility-study projects eligible for construction funding, and requires geographic distribution of awards across multiple Reclamation States.
The measure also revises the small storage program’s eligibility and term, authorizes multi-year appropriations for small storage and new natural water retention grants, caps the federal cost-share for retention projects at 90 percent, and declares Federal funds provided under the new retention grants nonreimbursable. The changes aim to accelerate distributed and groundwater-focused storage while preserving state water rights and limiting direct federal acquisition of water.
At a Glance
What It Does
The bill modifies the Water Infrastructure Improvements for the Nation Act and the Infrastructure Investment and Jobs Act to expand grant and construction-funding eligibility for storage projects, reauthorize and extend the small storage program with updated size thresholds, and create a new grant program for natural water retention and release projects. It sets annual authorizations ($20M/year for small storage through 2033; $15M/year for natural retention through 2031) and limits the federal share of retention projects to no more than 90 percent.
Who It Affects
Primary recipients include State and local water agencies, irrigation and water districts, municipalities, Tribes, and qualified nonprofit partners operating in Reclamation States; the Bureau of Reclamation administers the programs. Engineering, construction, and environmental consulting firms will see project opportunities and technical requirements tied to feasibility and storage-benefit estimates.
Why It Matters
The bill shifts more federal dollars toward both engineered storage and nature-based storage approaches and explicitly aims to distribute funding across Reclamation States, potentially changing how regional water projects are prioritized. Compliance officers and project sponsors need to prepare for new eligibility thresholds, documentation standards for storage benefits, and explicit cost-share and nonreimbursability rules.
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What This Bill Actually Does
The bill makes three operational changes to federal water-storage grant programs and creates a new niche program for nature-based retention. First, it amends the statutory storage-authority language so the Interior Secretary can provide financial assistance for projects in any Reclamation State and explicitly requires the Secretary to spread funding across multiple states rather than concentrating awards in a single basin.
It also allows projects that have received IIJA feasibility-study authorization to become eligible for construction funding under the storage program.
Second, it rewrites the 'small storage' eligibility definitions: projects must have a minimum of 200 acre-feet and upper bounds are adjusted depending on whether the project increases surface storage, conveys water, or provides groundwater recharge. The small storage program’s lifespan is extended (the statute’s sunset period is lengthened), and Congress authorizes $20 million per year for fiscal years 2027–2033 to implement it.
The bill also inserts an effect clause that preserves state water law, interstate compacts, treaties, and existing water rights and clarifies that the Federal Government cannot acquire water under this authority.Third, the bill establishes a new grant program for 'natural water retention and release projects'—defined to emphasize projects that use primarily natural materials, mimic hydrologic or ecosystem processes, and can be deployed as multiple distributed projects across a watershed. Eligible applicants include States, Tribes, municipal and special-purpose water districts, regional authorities, and nonprofits working with an eligible partner.
Grants can fund projects up to and above $20 million, but projects over $20 million must produce credible storage-benefit estimates for wet, normal, and dry years and receive Secretary concurrence. The Federal share is capped at 90 percent, and awarded Federal funds are expressly nonreimbursable.Taken together, the bill accelerates federal backing for both traditional storage and distributed, nature-based approaches while layering in documentation, distribution, and cost-share rules that will determine which projects move forward and how they are financed and operated over time.
The Five Things You Need to Know
The Secretary of the Interior may now provide financial assistance for storage projects anywhere in a Reclamation State and must ensure awards are distributed across multiple Reclamation States.
Small storage projects qualify if they have at least 200 acre-feet of storage; surface-storage projects are capped at 30,000 acre-feet, while groundwater recharge projects have an upper average-annual capacity of 150,000 acre-feet.
Congress authorizes $20 million annually for the small storage program for fiscal years 2027–2033 and extends the program’s statutory term from 5 to 10 years.
The bill creates a new natural water retention and release grant program with $15 million authorized per year for fiscal years 2027–2031, allows Federal cost-share up to 90 percent, and makes Federal grant funds nonreimbursable.
Projects with feasibility studies authorized under IIJA section 40902(a)(1)(B)(i) become eligible for construction funding under the amended storage authority, subject to applicable construction funding requirements.
Section-by-Section Breakdown
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Short title
Provides the short name 'Water Security and Drought Resilience Act.' This is the formal label for the statutory amendments that follow and carries no substantive programmatic effect beyond identification.
Expand storage-assistance authority and geographic distribution
Amends the storage-authority language in the Water Infrastructure Improvements for the Nation Act to permit the Secretary of the Interior to provide financial assistance for projects within any Reclamation State and to require that assistance be distributed among multiple Reclamation States. It also makes projects that had IIJA-authorized feasibility studies eligible for construction funding under the storage program. Practically, this provision increases the pool of projects that can receive federal construction dollars and imposes an explicit geographic-spread obligation on the Secretary when allocating funds.
Reauthorize and revise the small storage program
Alters eligibility criteria in the IIJA small storage program by setting minimum and maximum storage capacities and by expanding the program’s scope to include projects that increase groundwater aquifer storage, convey water to or from storage, recover water from groundwater, or stabilize groundwater levels. The section lengthens the program’s statutory duration (from a 5-year sunset to a 10-year window) and authorizes $20 million per fiscal year for 2027–2033. It also adds a clause preserving state and federal water law, compacts, treaties, and water rights, and clarifies that Federal acquisition of water is not authorized.
Natural water retention and release project grants
Creates a new grant program with definitions for 'natural water retention and release project,' 'eligible entity,' and 'qualified partner.' Grants are available for projects that primarily use natural materials and mimic hydrologic processes to increase storage or change runoff timing; projects at or below $20 million require demonstration of utility to a watershed with a Reclamation facility, while larger projects require credible estimates of storage benefits in wet, normal, and dry years and Secretary concurrence. The federal share is capped at 90 percent, funds are nonreimbursable, and $15 million per year is authorized for FY2027–2031. Administratively, the provision creates eligibility, documentation, and cost-share rules program offices will need to operationalize.
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Explore Infrastructure in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- State and local water agencies and irrigation districts — gain access to federal construction funding for smaller and groundwater-focused storage projects and to new grants for nature-based retention, lowering up-front capital barriers.
- Municipal water utilities and groundwater-dependent communities — benefit from investments that increase storage reliability and managed aquifer recharge options that can stabilize local supplies during drought.
- Conservation organizations and qualified nonprofit partners — obtain direct entry points to federal funding through the qualified-partner pathway, enabling public–private delivery of natural infrastructure.
- Engineering, environmental consulting, and construction firms — see new project pipelines, especially for distributed, watershed-scale natural retention work requiring specialized design and monitoring.
Who Bears the Cost
- Federal Treasury / taxpayers — funds the appropriations ($20M/year for small storage; $15M/year for natural retention) and assumes a larger share of project costs because grants can cover up to 90 percent for retention projects.
- Project sponsors (states, districts, municipalities) — must assemble matching funds (at least 10 percent for natural retention), prepare feasibility or storage-benefit analyses for larger projects, and meet documentation and compliance requirements.
- Bureau of Reclamation and Interior Department staff — incur added administrative workload to implement distribution requirements, evaluate credible storage estimates, coordinate with state water-right systems, and manage nonreimbursable grant terms.
- Smaller or resource-constrained localities without technical capacity — may struggle to compete for funds because projects over $20M require rigorous storage-benefit estimates and Secretary concurrence, favoring applicants with technical teams or consultants.
Key Issues
The Core Tension
The central dilemma is between accelerating federal investment to expand both engineered and nature-based storage (and thereby increasing drought resilience) and preserving state-based water-rights regimes and local control; in practice, federal grants can alter incentives and operational realities without changing legal title to water, producing benefits in supply resilience but also legal and governance frictions that the bill leaves largely to project sponsors and state systems to resolve.
The bill intentionally confines federal authority—saying it does not authorize acquisition of water or override state water law or compacts—but it expands federal money into spaces long governed by states. That creates implementation tension: funds can incentivize projects that shift subsurface storage dynamics (e.g., aquifer recharge) without changing the underlying water-rights framework; project sponsors will need to navigate who owns and can use recharged water and whether operations trigger existing water-rights obligations.
The requirement that large natural retention projects produce 'credible' storage-benefit estimates for wet, normal, and dry years raises technical and modeling challenges. Hydrologic modeling of distributed, nature-based interventions is complex and context-specific; disparities in technical capacity across applicants could skew awards to better-resourced applicants.
The statutory distribution mandate—spreading funds across multiple Reclamation States—adds a political and programmatic constraint that may reduce the ability to target investments to the single most cost-effective basin or to scale a regional solution rapidly. Finally, the bill authorizes modest annual appropriations relative to likely needs for meaningful storage expansion, and it does not create a long-term operations and maintenance funding mechanism, leaving long-term sustainability of projects dependent on state/local budgets or separate revenue sources.
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