How Reclamation Kept $2 Billion in Drought Aid Off the Ledger
Summary
A Department of the Interior Inspector General audit found the Bureau of Reclamation awarded $2,012,453,952 of a $2.6 billion Colorado River drought-mitigation allocation as "miscellaneous obligations" -- an accounting category exempt from USASpending.gov -- and never documented a single check of whether the water districts and irrigation companies receiving that money were barred from federal business.
A pool built to fight drought, a category that hid the ledger
Section 50233 of the Inflation Reduction Act⧉ appropriated $4 billion through fiscal year 2026 for the Interior Department to mitigate drought, prioritizing the Colorado River Basin. Reclamation allocated $2.6 billion of that to the Lower Colorado River Basin -- $1.4 billion to short-term water-conservation payments ("Bucket 1," paying water-entitlement holders to fallow fields or cut use) and $1.2 billion to long-term infrastructure work ("Bucket 2"). Reclamation received 84 Bucket 2 project proposals alone, ranging from $327,000 to more than $1.4 billion each⧉.
Reclamation chose to issue this money through water-related contracts recorded internally as "miscellaneous obligations" -- a category built for things like travel, training, and charge-card purchases, not $2 billion in drought aid. Unlike grants or cooperative agreements, miscellaneous obligations are not reported to USASpending.gov⧉, the searchable public database the Federal Funding Accountability and Transparency Act was built to populate. Reclamation built its own IRA spending dashboard, but as of March 31, 2025 that dashboard was not publicly accessible⧉ either.
View data as table
| Bucket 1 (short-term) allocated | 1,395,200,000 | Short-term water conservation pool |
|---|---|---|
| Bucket 1 (short-term) awarded | 1,355,628,470 | 97.2% of Bucket 1's allocation already committed -- $39,571,530 remaining |
| Bucket 2 (long-term) allocated | 1,205,700,000 | Long-term durable infrastructure pool |
| Bucket 2 (long-term) awarded | 656,825,482 | Only 54.5% committed -- $548,874,518 remaining |
Zero checks on who was getting paid
Every recipient of federal money is supposed to be checked against the government's exclusions list -- the registry of entities barred from federal business over prior misconduct or noncompliance. Auditors reviewed Reclamation's Bucket 1 agreement files and found no documentation that any water-entitlement holder was ever checked⧉ before funds went out. Reclamation's own explanation was that its Boulder Canyon Operations Office simply had no formal process for running the check⧉ -- not that it ran the check and found nothing.
Reclamation's fix, once flagged it, only reached part of the problem. The Lower Colorado Basin region told auditors it had already started running exclusions checks through SAM.gov⧉ -- but the audit's recommendations were written to cover every Reclamation region, and auditors found that two other Reclamation regions had separately awarded about $271 million in IRA-funded miscellaneous obligations for drought mitigation⧉ that the Lower Basin fix does not touch. rated all three recommendations unresolved for that reason.
A companion April 2026 audit of Reclamation's Upper Colorado River Basin program found the identical gap in a different administrative structure there; Reclamation's own response to that audit went further, arguing water-entitlement holders were not even subject to exclusions checks in the first place⧉ -- a position this report's own findings contradict.
- Reclamation awarded $2,012,453,952 of a $2.6 billion Lower Colorado Basin drought-mitigation allocation as "miscellaneous obligations" as of March 31, 2025 -- a bookkeeping category exempt from USASpending.gov, and Reclamation's own IRA spending dashboard was not publicly accessible either.
- Auditors found no documentation that Reclamation checked a single Bucket 1 water-entitlement holder against the federal exclusions list before awarding funds, because the office administering the program had no formal process for doing so.
- Reclamation's Lower Colorado Basin region began running exclusions checks after flagged the gap, but the fix does not extend to two other Reclamation regions that separately awarded roughly $271 million in the same unreported obligation category -- leaving all three recommendations rated unresolved.
- Bucket 1 (short-term conservation payments) is 97.2% committed against its $1.4 billion allocation; Bucket 2 (long-term infrastructure) trails at 54.5% of its $1.2 billion allocation, with $548.9 million still unawarded as of the audit's cutoff.
All figures trace to DOI Office of Inspector General Report No. 2023-WR-035, "The Bureau of Reclamation Should Improve Transparency in Inflation Reduction Act-Funded Drought Mitigation Agreements and Check to Ensure Funds Are Not Awarded to Excluded Parties" (April 10, 2026), and to Section 50233 of the Inflation Reduction Act. This piece independently recomputed the bucket-level award rates -- 97.2% for Bucket 1, 54.5% for Bucket 2, 77.4% overall -- directly from the report's own Figure 5 dollar totals, and combined the report's Lower Basin awarded total with its separately stated $271 million other-region figure to show the known scale of the same gap (a combination the report itself does not total, and which spans two different measurement points, not a single as-of date).
Sources(3) ▾
- Office of Inspector General, U.S. Department of the Interior, The Bureau of Reclamation Should Improve Transparency in Inflation Reduction Act-Funded Drought Mitigation Agreements and Check to Ensure Funds Are Not Awarded to Excluded Parties (Report No. 2023-WR-035) (2026-04-10) — The DOI 's final audit report on the Bureau of Reclamation's (BOR) Inflation Reduction Act (IRA) drought-mitigation funding for the Lower Colorado River Basin (LCRB) -- the sole source for every dollar figure and finding in this piece: the audit's scope, covering BOR's use of $2.6 billion in IRA funds from the law's August 16, 2022 enactment through April 16, 2024 (Introduction/Scope, p.1); the judgmental sample of seven Bucket 1A agreements from seven unique water-entitlement holders, totaling $317 million or 74 percent of the $428 million in the sampled population (p.1); the allocated/awarded/remaining breakdown by funding bucket as of March 31, 2025 -- Figure 5 (p.5); the description of Bucket 1A/1B/2 funding mechanics and the 84 Bucket 2 project proposals BOR received, ranging from $327,000 to over $1.4 billion each (p.5); the finding that BOR's use of 'miscellaneous obligations' as the award vehicle keeps IRA drought funds off USASpending.gov, and that BOR's own IRA spending dashboard was not publicly accessible as of March 31, 2025 (Results of Audit, p.8); the finding that BOR performed no documented suspension-and-debarment (Federal exclusions list) checks on any Bucket 1 water-entitlement holder before awarding funds (p.9-10); the three recommendations, BOR's response, and 's determination that all three remain unresolved because BOR's proposed fix is limited to the Lower Colorado Basin region while the recommendations apply to all BOR regions -- including the 's finding that two other BOR regions separately awarded approximately $271 million in IRA-funded miscellaneous obligations for drought mitigation, outside the scope of BOR's proposed fix (Recommendations Summary, p.12-13); and the conclusion restating the $2.6 billion/$2 billion totals and both accountability gaps (p.12). doioig.gov · original document
- United States Congress, Inflation Reduction Act of 2022, Public Law 117-169, Section 50233 (Drought Response and Preparedness) (2022-08-16) — The statutory text appropriating $4 billion through fiscal year 2026 to the Secretary of the Interior for drought mitigation activities, prioritizing the Colorado River Basin -- the underlying authority for the BOR spending the audit examined. congress.gov · original document
- Office of Inspector General, U.S. Department of the Interior, OIG Hotline Forms (2026-07-20) — Source for the DOI hotline's mailing address and online complaint-submission channels (general, confidential, anonymous, and whistleblower-retaliation forms), used for this article's cta.json. doioig.gov · original document
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For two years, the Bureau of Reclamation has paid out Inflation Reduction Act drought money in the Lower Colorado River Basin through a bookkeeping category that keeps it off the federal government's own public spending ledger. A U.S. Department of the Interior Inspector General audit⧉ found that as of March 31, 2025, Reclamation had awarded $2,012,453,952 of a $2.6 billion allocation this way -- and never documented a single check of whether the water districts and irrigation companies receiving that money were barred from doing business with the federal government at all⧉.