H.R. 7845 — DROUGHT Act of 2026

This section establishes an exception under the Water Infrastructure Finance and Innovation Act (WIFIA) allowing federal assistance of up to 90 percent (from 49 percent) of total costs for covered projects and directs the EPA Administrator or Army Corps of Engineers Secretary to prioritize financing for such projects. A covered project is a desalination or water recycling project under WIFIA section 5026(6) or (7) that meets at least one of the following criteria: (1) is located in a state designated as D2 (severe drought) or worse on the U.S. Drought Monitor for at least four weeks in the prior five years or in a county with a governor-declared drought emergency in that period; (2) serves an area with average household income at or below 200 percent of the federal poverty level or that meets state affordability criteria under the Safe Drinking Water Act (SDWA) or Clean Water Act (CWA) state revolving funds; or (3) is designated by the Administrator or Secretary as regionally or nationally significant due to benefits such as increased drinking water supply, enhanced reuse, reduced regional usage, lower ratepayer costs, or substantial public health or environmental improvements. (Thus, these projects may receive substantially more federal credit assistance than standard WIFIA projects to address drought, affordability, or supply challenges.)