HR7845

The DROUGHT Act of 2026 (HR7845), introduced on March 5, 2026, aims to amend the Water Infrastructure Finance and Innovation Act of 2014. The proposed amendment would increase the total federal assistance for covered water infrastructure projects in severe drought-stricken areas to 90% of the total project cost, up from the current 49%. A 'covered project' is defined as one located in a State designated as D2 (severe drought) or greater for at least 4 weeks during the preceding 5-year period, or in a county with a declared drought emergency. The bill also prioritizes financing for these covered projects. HR7845 was referred to the Committee on Transportation and Infrastructure, and the Committee on Energy and Commerce, on March 5, 2026, indicating it is in the early stages of the legislative process. This bill is an authorization bill, meaning it sets policy and spending ceilings but does not appropriate actual funds. If enacted, it would authorize a higher federal share for specific water infrastructure projects, making them more financially viable. Actual funding would depend on subsequent appropriations bills. The mechanism is an increase in the federal cost-share for projects, which would reduce the financial burden on state and local entities, thereby stimulating demand for water treatment, distribution, and conservation solutions. Companies involved in water infrastructure development, such as engineering firms, construction companies, and equipment suppliers, would be positioned to benefit from increased project activity. Structural beneficiaries, if this bill were to pass and receive appropriations, would include water utility companies and infrastructure developers operating in drought-prone regions. Companies like Essential Utilities, Inc. ($WTRG), American Water Works Company, Inc. ($AWK), and California Water Service Group ($CWT) could see an expanded pipeline of federally supported projects. These companies are involved in water and wastewater services, which would directly benefit from increased investment in infrastructure. The bill's focus on severe drought regions means that companies with significant operations or market presence in these areas would be particularly well-positioned. Looking at recent market data, Essential Utilities, Inc. ($WTRG) is currently trading at $40.89, with a 7-day change of -0.39% and a 30-day change of +3.31%. American Water Works Company, Inc. ($AWK) is at $137.91, showing a 7-day change of -0.66% and a 30-day change of +2.44%. California Water Service Group ($CWT) is at $45.67, with a 7-day change of -0.83% and a 30-day change of -0.24%. All three companies have experienced minor fluctuations in the past week, but generally positive movement over the last 30 days, with $CWT showing a slight decline over 30 days. These movements are not directly attributable to the introduction of HR7845, given its early legislative stage. The next legislative steps involve committee consideration, potential amendments, and votes in both the House and Senate, followed by presidential assent. The bill is sponsored by Rep. Peters, Scott H. [D-CA-50] and has 8 cosponsors, indicating some level of support. However, its referral to two committees suggests a thorough review process. The timeline for passage is uncertain, as it is in the very early stages of the legislative process.